It's official: EU probing bundling of Teams with Microsoft 365

Updated The European Commission has officially launched a “formal investigation” into whether Microsoft flouted EU competition rules by bundling Teams with dominant productivity software suite Office 365 and Microsoft 365.

It’s been a long time in the making: Teams was integrated into the Windows-maker's software line-up in 2017, and Slack complained to the EU in 2020 that the move was anti-competitive as it forced the install on millions of customers, removal was blocked, and the true cost of the collaboration app was hidden.

Today, as it embarks on the antitrust investigation, the EC pointed out the importance of web-based video conferencing apps, whose use soared during the pandemic as employees worked from home and consumers tried to stay in touch with friends and family.

Teams had amassed 280 million daily active users by February, according to Microsoft. In comparison, Slack has amassed 43.7 million daily active users.

The Commission said it is “concerned” that Microsoft may be “abusing and defending” its hierarchy in productivity software by “restricting competition in the European Economic Areas for communication and collaboration” tools.

The most pressing worry, the EC says, is that Microsoft is giving Teams an advantage by “not giving customers the choice on whether or not to include access to that product when they subscribe to their productivity suites and may have limited the interoperability between its productivity suites and competing offerings.”

These practices and policies may “constitute anticompetitive tying or bundling” that diminishes the ability of rivals to compete, to the “detriment of customers” in the EEA. The Commish says it will carry out the inspection s a “matter of priority.”

Margrethe Vestager, Executive Vice President in charge of competition policy, said in a statement: “Remote communication and collaboration tools like Teams have become indispensable for many businesses in Europe. We must therefore ensure that the markets for these products remain competitive, and companies are free to choose the products that best meet their needs.

"This is why we are investigating whether Microsoft's tying of its productivity suites with Teams may be in breach of EU competition rules," she added.

In recent months, Microsoft is understood to have offered numerous concessions to the EU over Teams stave off the threat of a full blown probe, including offering to unbundle the products and offering to charge different prices for Office (aka Microsoft 365) with or without Teams. Clearly this did not appease the regulators operating in the antitrust team.

• Microsoft whips up unrest after revealing Azure AD name change
• Antitrust clouds continue to gather over Microsoft's European business
• Microsofties still digesting pay freeze upset by Nadella's 'landmark year' memo
• Top cloud players reject Microsoft's attempt to settle EU licensing complaint
• Nextcloud boss: You gotta fight … for your right … to 'plug into Windows and offer the exact same service'

We have asked Microsoft to comment but the local comms team often waits for Redmond to wake up before it emits a statement. We have also offered Salesforce, the owner of Slack these days, the opportunity to comment.

In addition to Slack, German biz alfaview last week made a complaint to the EC about Teams and its integration into Office, though the powers that be had likely made their mind up about pursuing the probe already.

Other tech firms have complained about Microsoft’s cloud software practices of charging higher prices to customers that want to run its software in a third party public cloud other than Azure. Nothing formal has been launched in this area but it is clear the regulators are listening. ®

Updated at 15.34 UTC on July 20, 2023 to add:

A sokesperson at Microsoft sent us a statement: "We respect the European Commission's work on this case and take our own responsibilities very seriously. We will continue to cooperate with the Commission and remain committed to finding solutions that will address its concerns."

Salesforce has refused to comment.