The European Commission has informed Microsoft of its preliminary view that Microsoft has breached EU antitrust rules by tying its communication and collaboration product Teams to its popular productivity applications included in its suites for businesses Office 365 and Microsoft 365.
According to the Commission, suppliers of business application software, including Microsoft, are increasingly distributing this software as software as a service (SaaS).
“In principle, cloud computing enables new market players to offer SaaS solutions and customers to use various software from different providers,” it says in a statement. “However, Microsoft has a suite-centric business model combining multiple types of software in a single offering. When Teams was launched, Microsoft included it in its widely used cloud-based productivity suites for business customers Office 365 and Microsoft 365.”
Since Microsoft is a dominant worldwide global vendor for SaaS productivity applications for professional use, the Commission is concerned that, since at least April 2019, Microsoft has been tying Teams with its core SaaS productivity applications, thereby restricting competition on the market for communication and collaboration products and defending its market position in productivity software and its suites-centric model from competing suppliers of individual software.
“In particular, the Commission is concerned that Microsoft may have granted Teams a distribution advantage by not giving customers the choice whether or not to acquire access to Teams when they subscribe to their SaaS productivity applications,” it states.
“This advantage may have been further exacerbated by interoperability limitations between Teams competitors and Microsoft’s offerings. The conduct may have prevented Teams rivals from competing, and in turn innovating, to the detriment of customers in the European Economic Area.”
If confirmed, these practices would infringe Article 102 of the Treaty on the Functioning of the European Union (TFEU), which prohibits the abuse of a dominant market position.
Since the Commission opened proceedings in July 2023, Microsoft has introduced changes in the way it distributes Teams, offering some suites without Teams, but the commission preliminarily finds that these changes are insufficient to address its concerns and that more changes to Microsoft’s conduct are necessary to restore competition.
“We are concerned that Microsoft may be giving its own communication product Teams an undue advantage over competitors, by tying it to its popular productivity suites for businesses,” says Margrethe Vestager, executive vice-president in charge of competition policy.
“And preserving competition for remote communication and collaboration tools is essential as it also fosters innovation on these markets. If confirmed, Microsoft’s conduct would be illegal under our competition rules. Microsoft now has the opportunity to reply to our concerns.”