Microsoft in EU antitrust crosshairs over Teams, Office tie-up

Microsoft on Thursday found itself the target of an European Union antitrust investigation over the bundling of its chat and video app Teams with its Office product, putting it at risk of a hefty fine.

The US tech giant has racked up €2.2 billion ($2.5 billion) in EU antitrust fines in the previous decade for practices in breach of EU competition rules, including tying or bundling two or more products together.

Since then Microsoft has adopted a more conciliatory approach with the European Commission. The European Commission's investigation followed a complaint by Salesforce-owned workspace messaging app Slack in 2020 and after the U.S. tech giant's offer of remedies failed to address the EU competition enforcer's concerns.

Teams, which Microsoft added to Office 365 in 2017 for free to eventually replace Skype for Business, soared in popularity during the pandemic especially after it offered video conferencing.

The Commission is seeking to fast track the case and is looking to issue formal charges against Microsoft in the autumn unless the company improves its concessions, a person familiar with the matter told Reuters.

The EU competition enforcer said it was concerned that Microsoft may be abusing and defending its market position in productivity software by restricting competition in the European communication and collaboration products market.

"Remote communication and collaboration tools like Teams have become indispensable for many businesses in Europe. 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," EU antitrust chief Margrethe Vestager said in a statement.

A spokesperson for Microsoft said Microsoft would continue to co-operate with the European Commission and that the company remained committed to finding solutions to address the Commission's concerns.

Reuters reported earlier this month that the EU antitrust watchdog was set to open a probe after Microsoft declined to offer bigger price cuts on its Office without Teams.

The European Commission hopes a price differential between Office with Teams and Office without the app will ensure a level playing field with rivals and give consumers more choice, people familiar with the matter have told Reuters.

German rival alfaview, which last week filed a complaint similar to Slack's with the EU executive, welcomed the EU investigation.

"With our complaint, we want to make clear that this is not about a fight between two US tech giants, but about the protection of innovations of all kinds," its CEO and founder Niko Fostiropoulos said in a statement.

EU fines for antitrust violations can go as high as 10% of a company's global turnover.

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