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European Commission starts investigation into Microsoft Teams bundling

 

Margrethe Vestager, executive vice-president in charge of competition policy at the European Commission (EC), has said it will start a formal investigation to assess whether Teams and Microsoft 365 bundling is anti-competitive.

The investigation follows on from the July 2020 complaint made by Slack Technologies, which alleged that Microsoft illegally tied Teams to its dominant productivity suites.

At the time, Jonathan Prince, vice-president of communications and policy at Slack, said: “This is much bigger than Slack versus Microsoft – this is a proxy for two very different philosophies for the future of digital ecosystems, gateways versus gatekeepers.

“Slack offers an open, flexible approach that compounds the threat to Microsoft because it is a gateway to innovative, best-in-class technology that competes with the rest of Microsoft’s stack and gives customers the freedom to build solutions that meet their needs. We want to be the 2% of your software budget that makes the other 98% more valuable; they [Microsoft] want 100% of your budget every time.”

Bundling of collaboration tools with office productivity software may save organisations the cost of running two entirely separate communications platforms. However, the European Commission is concerned that the bundling of such products has long-term implications, as it reduces choice for consumers and business users.

The EC said it was concerned that Microsoft may grant Teams a distribution advantage by not giving customers the option to exclude it as part of a subscription package to the company’s office productivity suite. It also plans to look at the extent of interoperability between Microsoft’s productivity suites and competing offerings.

Given the shift to remote working during and since the pandemic, Microsoft has established its Teams collaboration and video-conferencing software as a key component in its cloud-based productivity suite for business customers. The European Commission said it was concerned that Microsoft may be abusing and defending its market position in productivity software by restricting competition in the European Economic Area (EEA) for communication and collaboration products.

The tying or bundling of Teams with the Microsoft Office suite may, according to the commission, be preventing suppliers of other communication and collaboration tools from competing, to the detriment of customers in the EEA.

If proven, the behaviour under investigation may breach European Union competition rules, which prohibit the abuse of a dominant position. The commission said it would be carrying out its in-depth investigation as a matter of priority. It has informed Microsoft and the competition authorities of the member states that it has opened proceedings in the case.

“Remote communication and collaboration tools like Teams have become indispensable for many businesses in Europe,” said the EC’s Vestager. “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 its productivity suites with Teams may be in breach of EU competition rules.”

In 2021, Salesforce completed its acquisition of Slack in a bid to establish itself as an alternative platform to Microsoft. At the time, Salesforce CEO Marc Benioff described the two comanies joining up as “the future of enterprise software”.

Benioff’s plan is to offer businesses a digital headquaters to enable them to deliver customer and employee success from anywhere, but this strategy risks being undermined if Microsoft Teams becomes established as the de facto standard for enterprise communications.

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