EU charges Microsoft with 'abusive' bundling of Teams and Office, breaching antitrust rules

The European Union on Tuesday accused Microsoft of breaching antitrust rules with the "abusive" bundling of its Teams and Office products.

"The European Commission has informed Microsoft of its preliminary view that Microsoft has breached EU antitrust rules by tying its communication and collaboration product Teams to its popular productivity applications included in its suites for businesses Office 365 and Microsoft 365," the European Commission — the EU's executive arm — said in a Statement of Objections, which is sent to inform companies of concerns raised against them.

If the commission decides that an infringement has taken place once companies have responded, it can ban the conduct and fine the charged company up to 10% of its global revenue.

Microsoft took the preemptive step to unbundle Teams from Microsoft 365 in an effort to quash antitrust concerns by the EU. However, the commission said in its Tuesday statement that the changes were "insufficient to address its concerns and that more changes to Microsoft's conduct are necessary to restore competition."

Microsoft said it would work to find solutions to address the commission's additional concerns. "Having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity provided today," Microsoft's vice chair and president, Brad Smith, said in a statement Tuesday. The company's shares were broadly unchanged in premarket trading Tuesday.

The EU opened its investigation into Microsoft — which remains ongoing — in July 2023 after a complaint by Salesforce-owned Slack, which has a rival chat service to Teams.

The commission's concerns are centered around the fact that, starting in around 2019, Microsoft tied Teams with its software as a service — or SaaS — applications, such as Office. It notes that Microsoft is "dominant worldwide" in the SaaS market for professional productivity applications.

"In particular, the Commission is concerned that Microsoft may have granted Teams a distribution advantage by not giving customers the choice whether or not to acquire access to Teams when they subscribe to their SaaS productivity applications," EU regulators wrote, noting that the tech giant's advantage may have been exacerbated by limitations of interoperability — the ability of two or more systems to work together — between Microsoft's offerings and Teams' competitors.

"The conduct may have prevented Teams' rivals from competing, and in turn innovating, to the detriment of customers in the European Economic Area," the commission said.