The European Union (EU) has reached a preliminary conclusion that Microsoft’s practice of bundling its video conferencing app, Teams, constitutes a violation of antitrust laws. The EU announced the results of an investigation stating that Apple also violated the EU’s tech company regulation law, the Digital Market Act (DMA), showing a tough stance against American tech giants.
On June 25, the European Commission judged that Microsoft, which is in a dominant market position, had limited competition by bundling Teams with its software-as-a-service (SaaS) apps since April 2019. The Commission has sent Microsoft a statement of objections detailing its preliminary findings.
This preliminary conclusion by the EU came out after a five-year investigation. In 2019, messaging platform Slack reported to the EU that competition was limited due to Microsoft’s bundling of Teams. Slack was acquired by cloud-based customer management software provider Salesforce in 2021.
The European Commission pointed out that although Microsoft changed its distribution method to not include Teams in some product lines after the Commission officially started its activities in July last year, it was insufficient to alleviate the concerns of the European Commission.
The European Commission ordered, “Additional remedial actions by Microsoft are necessary to restore competition.”
In response to the Commission’s investigation, Microsoft announced in April that it would sell Teams globally. However, the European Commission judged that this measure was not enough.
The number of users of Microsoft’s Teams video app has increased significantly during the COVID-19 pandemic. The daily user count, which was about 2 million in its first year of operation in 2017, increased to 300 million last year.
The Commission’s statement of objections is part of the formal process in antitrust investigations. Issuing this document indicates that preliminary findings show Microsoft’s remedial actions are insufficient, and the investigation will continue.
Once the review report is issued, Microsoft must submit a rebuttal or a response letter containing additional corrective measures. The Commission will comprehensively review Microsoft’s response and its investigation results to make the final call on whether to impose sanctions, including fines. If Microsoft is found guilty of violating EU antitrust laws, it may have to pay a fine equivalent to up to 10% of its annual global sales.
Microsoft expressed its intention to prepare additional corrective measures and negotiate with the Commission when it was predicted that the review report would be issued earlier this month.
Microsoft said in a statement, “We unbundled Teams from our SaaS apps and taken steps to ensure interoperability.” Brad Smith, Microsoft’s Vice Chairman, stated, “We will work to find solutions to address the Commission’s additional concerns.”
Regarding the acquisition of Activision Blizzard, which had been a concern for violation of antitrust laws, Microsoft proposed a solution to alleviate antitrust concerns and received approval from the EU last year.
