The European Union has charged Microsoft with antitrust violations related to the bundling of its Teams chat app with its Office 365 and Microsoft 365 subscriptions. This marks the first such charges against Microsoft in 15 years, following significant cases involving Windows Media Player and Internet Explorer.
Details of the Charges
The European Commission issued a statement expressing its concerns that Microsoft breached EU antitrust rules by tying Teams to its popular productivity suites for businesses. This practice allegedly gives Teams an undue advantage over competitors like Slack and Zoom.
Margrethe Vestager, the EU’s head of competition policy, emphasized that if these allegations are confirmed, Microsoft’s conduct would be illegal under EU competition rules. Microsoft has been given the opportunity to respond to these concerns.
Microsoft’s Response and Background
In response to the charges, Microsoft stated it is working with the EU to find solutions. Brad Smith, Microsoft’s president, acknowledged the Commission’s concerns and reiterated the company’s commitment to addressing them. Microsoft had previously unbundled Teams from Office in Europe and globally to address regulator concerns but still faces charges.
This investigation follows a complaint filed by Slack in July 2020, which accused Microsoft of anti-competitive behavior by illegally tying Teams to Office, force-installing it for millions, blocking its removal, and hiding its true cost to enterprise customers.
Potential Consequences
If Microsoft is found guilty, it could face a fine of up to 10% of its annual worldwide turnover. Additionally, the European Commission could impose remedies to force Microsoft to change its software products, similar to past cases. Notably, in 2004, Microsoft was required to offer a version of Windows without Media Player, and in 2009, it was forced to implement a browser ballot box in Windows.
Historical Context and Ongoing Scrutiny
The new charges are reminiscent of past antitrust cases against Microsoft. The company’s bundling practices have long been a point of contention, resulting in significant regulatory action both in the US and the EU. This latest case adds to a series of regulatory challenges for Microsoft, including scrutiny over its $75 billion acquisition of Activision Blizzard and its $13 billion partnership with OpenAI.
Sebastian Niles, president at Salesforce, welcomed the charges, calling them a win for customer choice and competition. Despite Microsoft’s attempts to preempt regulatory action by unbundling Teams, the European Commission found these measures insufficient to ensure fair competition.
Broader Implications for Big Tech
The charges against Microsoft come amid increased scrutiny of major tech companies by EU regulators. Recently, the European Commission also accused Apple of stifling competition on its App Store, marking the first charges under new digital rules aimed at curbing the power of Big Tech.
As Microsoft navigates these regulatory challenges, it remains to be seen how the company will adjust its practices to comply with EU competition laws and whether it can avoid the hefty fines and mandatory changes that could follow an adverse ruling.
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