Microsoft is facing a significant antitrust fine from the European Commission after being accused of illegally integrating its chat and video app, Teams, with its Office product suite.
In FY24 Q1 results, Microsoft disclosed that the number of Teams users has reached 320 million monthly active users.
The subscription price of Microsoft Teams Essentials is $4 per user per month. The price for Microsoft 365 Business Basic is $6 per user per month. The price for Microsoft 365 Business Standard is $12.5 per user per month.
This action, initiated by a 2020 complaint from rival Slack, now owned by Salesforce, marks the first major EU antitrust case against Microsoft in two decades.
European Commission, serving as the EU competition watchdog, stated that Microsoft’s bundling of Teams with Office products provided it with a distribution advantage, while also limiting the interoperability between Teams’ competitors and Microsoft’s offerings. This situation allegedly hindered competition and innovation in the remote communication and collaboration tools market.
“Preserving competition for remote communication and collaboration tools is essential as it also fosters innovation on these markets,” said EU antitrust chief Margrethe Vestager.
Microsoft previously faced a €2.2 billion ($2.4 billion) fine from the EU for similar antitrust violations, Reuters news report said.
If found guilty of the current charges, Microsoft could face a fine of up to 10 percent of its global annual turnover. Microsoft generated total revenue of $212 billion in 2023.
Despite taking steps to address the concerns, such as unbundling Teams from Office globally and making it easier for rivals to work with its products, the Commission deemed these measures insufficient.
Microsoft President Brad Smith expressed the company’s commitment to resolving the issue, saying, “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.”
Salesforce President and Chief Legal Officer Sabastian Niles urged the Commission to implement a swift and effective remedy to ensure a free and fair market choice.
Alfaview, a German rival and complainant, also welcomed the Commission’s charges against Microsoft. Teams, which was added to Office 365 in 2017 for free and later replaced Skype for Business, gained significant popularity during the pandemic due to its video conferencing capabilities. However, competitors argued that bundling Teams with Office gave Microsoft an unfair market advantage.
European Commission’s investigation revealed that since at least April 2019, Microsoft has tied Teams with its core SaaS productivity applications, thereby restricting competition in the market for communication and collaboration products. This conduct may have prevented Teams’ rivals from effectively competing and innovating, to the detriment of customers in the European Economic Area.
The Commission’s investigation followed complaints from Slack Technologies, now owned by Salesforce, and alfaview GmbH, a German company, both raising concerns about Microsoft’s distribution practices with Teams.
