Microsoft breached EU antitrust rules with Teams bundling practices – now it could face a hefty fine

EU lawmakers have charged Microsoft for breaching antitrust rules over its Teams bundling practices, paving the way for a potentially hefty fine for the tech giant. 

In a statement this week, the EU took aim at Microsoft’s “suite-centric business model”, stating that the company undermines competitiveness in the European market by bundling Teams into its Microsoft and Office 365 offerings.  

“The Commission is concerned that, since at least April 2019, Microsoft has been tying Teams with its core SaaS productivity applications, thereby restricting competition on the market for communication and collaboration products,” the Commission stated.

The Commission expressed concern that Microsoft may not have given customers a choice in Teams acquisition when subscribing to Microsoft’s wider SaaS platforms, thereby giving Teams a “distribution advantage”.

The EU said then that such an advantage might have been exacerbated by “interoperability limitations” between Microsoft and its competitors, ultimately to “the detriment of customers in the European Economic Area”. 

The commission acknowledged that Microsoft has made moves to ease the concerns of the European regulators since the investigation’s impetus in 2023.

For example, the company announced plans to unbundle Teams from its 365 platforms in Europe and then globally over the last year. 

Microsoft president Brad Smith also publicly expressed a commitment to taking further steps to solve the antitrust case earlier this year. 

Smith has since responded to the latest developments in comment to ITPro - “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," he said.

The EU stated that the changes so far have been “insufficient” and that a greater degree of alteration is required to restore fair competition in the region. 

“Preserving competition for remote communication and collaboration tools is essential as it also fosters innovation in these markets,” said Margrethe Vestager, VP in charge of competition policy in the Commission.

“If confirmed, Microsoft’s conduct would be illegal under our competition rules. Microsoft now has the opportunity to reply to our concerns,” she added. 

Microsoft’s critics vindicated by EU ruling

The EU’s investigation into Microsoft began with a complaint made by rival productivity platform Slack, a firm now understandably pleased with the Commission’s latest decision. 

The Salesforce-owned firm welcomed the decision by lawmakers, adding that the move will help improve competition for rival platforms in the region. 

“The Statement of Objections issued today by the European Commission is a win for customer choice and an affirmation that Microsoft’s practices with Teams have harmed competition,” said Sabastian Niles, president and CLO at Slack’s owner, Salesforce. 

“We appreciate the Commission’s thorough investigation of Slack's complaint and urge the Commission to move towards a swift, binding, and effective remedy that restores free and fair choice and promotes competition, interoperability, and innovation in the digital ecosystem,” Niles added. 

Microsoft is embroiled in other antitrust cases as well, such as an ongoing dispute with Cloud Infrastructure Service Providers in Europe (CISPE) in which Microsoft is being accused of anti-competitive software licensing practices.