Sunday, July 21, 2024

Microsoft hit with EU antitrust charges over Teams

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BRUSSELS :The European Union charged Microsoft with antitrust violations related to the company’s bundling of its Teams collaboration tool with Office 365 and Microsoft 365.

The European Union charged Microsoft with antitrust violations related to the company’s bundling of its Teams collaboration tool with Office 365 and Microsoft 365.

The European Commission, the bloc’s antitrust enforcer, said Tuesday it has informed Microsoft of its preliminary view that the company broke antitrust rules by tying Teams to popular productivity offerings that include Microsoft Word and Excel. The Commission said Microsoft may have given Teams an advantage by not giving customers a choice about whether they would get access to the software when subscribing to other products.

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The European Commission, the bloc’s antitrust enforcer, said Tuesday it has informed Microsoft of its preliminary view that the company broke antitrust rules by tying Teams to popular productivity offerings that include Microsoft Word and Excel. The Commission said Microsoft may have given Teams an advantage by not giving customers a choice about whether they would get access to the software when subscribing to other products.

Changes that Microsoft made last year to the way it distributes Teams didn’t go far enough to address the competition concerns, the Commission said.

Microsoft President Brad Smith said the company appreciates the additional clarity it received on Tuesday “and will work to find solutions to address the Commission’s remaining concerns.”

The EU opened a formal investigation into Microsoft’s bundling of its Teams software last year, after receiving a complaint from business-messaging-app maker Slack Technologies. Slack is now owned by Salesforce.

If the Commission concludes the company breached antitrust rules, Microsoft could face a fine of up to 10% of its global annual revenue. The company will have a chance to argue its case and can propose commitments to address regulators’ concerns and avoid a potential fine.

The charges, which the EU refers to as a statement of objections, are the first to be levied by the bloc against Microsoft in an antitrust case targeting the company’s behavior in more than a decade.

Microsoft’s initial battles with antitrust regulators in the 1990s and 2000s were central to the early days of antitrust enforcement in the digital era. After working to resolve those fights, the company received relatively little attention as regulators turned their focus to other tech giants including Alphabet’s Google and Facebook-owner Meta Platforms.

That appears to be shifting. Microsoft’s purchase of gaming giant Activision Blizzard last year was initially blocked by U.K. regulators before they eventually allowed it to go ahead, and the company’s aggressive pursuit of artificial-intelligence partnerships has attracted attention in the U.S., U.K. and Europe.

There are parallels between earlier investigations into Microsoft and the charges the company now faces on Teams because both relate to bundling, or tying, less popular services to those that are widely used. Regulators in the 1990s and 2000s focused on Microsoft’s bundling of its Internet Explorer browser and media player with the Windows operating system.

Microsoft last year changed the way it sells Teams to business customers in Europe, and later applied the same changes worldwide. Its new system allows some customers to buy a lower-priced version of the company’s productivity suites that doesn’t include Teams. New customers that want Teams can purchase the service separately.

Customers who already pay for a Microsoft productivity suite with Teams, and some new customers, can continue to have those products packaged together under Microsoft’s current terms, the company has said.

Microsoft has separately faced antitrust complaints in Europe related to its cloud services, but the EU hasn’t launched a formal investigation into those concerns.

Write to Kim Mackrael at kim.mackrael@wsj.com

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