Microsoft faces a hefty antitrust fine after the European Commission on Tuesday accused it of illegally linking its chat and video app Teams with its Office 365 suite of products including Word.
The allegations, which the US tech company can challenge, are the most serious it has faced since 2013 when it was hit with an unprecedented €561m (£474m) fine for failing to promote rivals to its Internet Explorer web browser.
Use of the Teams video platform rocketed during the pandemic when lockdowns around the world led offices to hold meetings using what were new applications for many customers.
According to data platform Statista, the tech company had about 20 million Teams customers in 2019, the before the pandemic began, but by 2023 that had rocketed to 300 million.
The commission informed Microsoft of its preliminary antitrust investigation findings on Tuesday.
It concluded that Microsoft was “dominant worldwide” in the market for professional “software as a service” (Saas) and said it was concerned that the company had been tying Teams with its core products, disadvantaging those who were selling rival products individually such as messaging platform Slack, whose 2020 complaint triggered the launch of the investigation last July.
“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,” said Margrethe Vestager, the executive vice-president in charge of competition policy at the commission.
With so many customers already buying the company’s Office 365 suite, the commission said it was concerned that “may have granted Teams a distribution advantage by not giving customers the choice whether or not to acquire access to Teams when they subscribe”.
Earlier this year Microsoft tried to avert regulatory action by announcing plans to unbundle Teams from some software packages sold in Europe.
However, regulators have called the changes “insufficient”, arguing that additional adjustments are necessary.
Microsoft’s vice-chair and president, Brad Smith, said: “Having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity provided today and will work to find solutions to address the commission’s remaining concerns.”
The commission’s inquiry began last July after it received complaints from the Canadian Slack Technologies, which has since been acquired by Salesforce, and the German video conference software provider Alfaview.
The chief executive of Alfaview, Niko Fostiropoulos, welcomed the commission’s preliminary findings, saying it shared the view that the countermeasures taken by Microsoft were “insufficient, as they maintain the bundling in essential parts”.
He added that direct talks between Microsoft and alfaview also failed to result in a solution that would address the competition concerns.
