The everlong battle between Microsoft and the European Commission gained a fresh page in its annals, as not only does the Commission believe the software giant has breached EU antitrust laws, but it also finds changes to how Microsoft distributes Teams to be "insufficient to address its concerns" and that "more changes to [its] conduct are necessary to restore competition."
That's according to a recent statement by the European Commission (EC), in which it reports its preliminary findings in an antitrust investigation into Microsoft and its cloud-based communication application, Teams. That all kicked off when Slack Technologies (now owned by Salesforce) lodged a complaint with the EC in 2020, in which it alleged that Microsoft had illegally tied Teams to its productivity software packages.
Three years later, the EC opened an investigation as to whether Microsoft was in breach of Article 102 of the Treaty on the Functioning of the European Union, essentially a law that prohibits companies from abusing a dominant position in the EU market. Around the same time, Alphaview (a developer of video-conferencing software) also lodged a similar complaint, and the EC has decided to adjust the investigation so that it covers both allegations.
In its statement, the Commission writes that Microsoft has been "restricting competition on the market for communication and collaboration products" and that the changes Microsoft had put into place when the EC commenced its investigation are "insufficient to address its concerns and that more changes to Microsoft's conduct are necessary to restore competition."
The changes in question were quite simple: Microsoft stopped including Teams with its Microsoft 365 and Office 365 subscriptions for Switzerland and countries in the European Economic Area (EEA). It also adjusted its software to allow companies, such as Zoom and Slack, to create integrated solutions for products like Exchange, Outlook and, of course, Teams.
However, the European Commission is still 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" and that its "conduct may have prevented Teams' rivals from competing, and in turn innovating, to the detriment of customers in the European Economic Area."
If the EC's concerns are confirmed by the investigation, after Microsoft has carried out a defence of its actions, then the EC can impose a fine of up to 10% of the company's annual worldwide turnover. In 2023, Microsoft's total revenue was just over $210 billion, so the fine would be the largest ever issued, in the company's history with the EC, by a factor of almost 10.
Even for a company with the world's largest market capitalisation, twenty-odd billion dollars is hardly small change. Not that the news worried investors, as Microsoft's share prices showed no signs of dropping in value. I have no doubt that It will contest the Commission's findings, but whether it will just pay the fine or make Teams a completely separate package is anyone's guess right now.
In the meantime, I'll just munch on some popcorn and watch what happens. Popcorn's a healthy snack, did you know that? Tasty, too. Much nicer to eat than a certain cloud-based communications and collaboration tool, that's for sure.
