[German]Now it's official what has been whispered behind closed doors by insiders for weeks. The European Commission has launched a formal investigation into whether Microsoft may have violated EU competition rules. At issue is Microsoft's communications and collaboration product Teams and its tying or bundling with the popular Office 365 and Microsoft 365 enterprise suites.
It's been rumored for a long time
Since the beginning of July 2023, rumors have persisted or there have been reports in media with contacts in Brussels of an upcoming formal investigation by the EU Commission against Microsoft. I last addressed the issue on July 21, 2023 in the post EU antitrust complaint against Microsoft for Teams bundling with Office 365. At that time, the EU Commission had received another competition complaint from the German provider Alfaview from Karlsruhe/German against Microsoft.
It's all about the fact that Microsoft has bundled its Teams communication and collaboration software with Office 365 and Microsoft 365. Microsoft has been supplying Teams free of charge with Office 365 since 2017. The first formal complaint against this constellation came in 2020 from competitor Slack, which filed a competition complaint against Microsoft over Teams bundling. But there have been other antitrust complaints against Microsoft, for example from Nextcloud (see Nextcloud files competition complaint against Microsoft over OneDrive and Teams in Windows 11).
Before initiating a formal investigation, the European Commission contacts the manufacturers and requests their comments. According to my interpretation, Microsoft was not able to sufficiently refute the questions of the EU Commission or the allegations in question to prevent the initiation of the investigation. Even Microsoft's offer to refrain from shipping Teams with Office 365, which I reported on in April 2023 in the article Microsoft agrees not to bundle Teams with Office reported, does not seem to have brought about any change.
Formal opening of competition proceedings
In a July 27, 2023, announcement, the EU Commission said it has now opened a formal investigation into whether Microsoft may have violated EU competition rules by tying or bundling its Teams communications and collaboration product with its popular Office 365 and Microsoft 365 enterprise suites.
The question is whether Microsoft abused its dominant position to hinder competition. The EU Commission classifies Microsoft as a global technology company that offers productivity and enterprise software, cloud computing and personal computing. Teams is a cloud-based tool for communication and collaboration. It offers features such as messaging, calling, video conferencing and file sharing, and brings together Microsoft and third-party workplace tools and other applications.
With the outbreak of the corona virus and the shift to telecommuting, companies created a need for cloud-based software for communication and collaboration. The transition to the cloud has enabled the emergence of new market players and business models that offer customers the ability to use multiple types of software from different providers without having to maintain their own data center. Cloud-based software, which includes the products under review, is typically sold on a subscription basis.
This has therefore opened up opportunities for other market players to participate in this new area of business. However, Microsoft has integrated its Teams solution into cloud-based productivity suites Office 365 and Microsoft 365, which are already used in a quasi-monopoly manner in the corporate environment. So anyone using these business suites had no need for third-party solutions like Slack or Alfaview.
The Commission has concerns that Microsoft is abusing and defending its market position in productivity software by restricting competition in the European Economic Area (EEA) in communications and collaboration products. Specifically, there is a suspicion that Microsoft is giving Teams a distribution advantage through bundling by not allowing customers to choose whether or not they want access to their productivity software when they take out a subscription.
If, during the investigation, the EU Commission finds anti-competitive tying or bundling that prevents providers of other communication and collaboration tools from competing, this would be abuse of a dominant position, which is prohibited under (Article 102 of the Treaty on the Functioning of the European Union (TFEU)). Such abuse can be severely sanctioned. The Commission will conduct its in-depth investigation as a matter of priority. The initiation of a formal investigation procedure does not prejudge its outcome, the Commission says.
The duration of an antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the companies concerned cooperate with the Commission and the exercise of the rights of defense. There is no statutory time limit for the termination of an antitrust investigation. A spokesman for Microsoft said it would cooperate with the EU antitrust authority in the investigation.
For Microsoft, it is the first EU antitrust investigation in more than 10 years. Between 2004 and 2013, there were various antitrust fines based on competitor complaints against Microsoft, which totaled 2.2 billion euros. In addition, the German Federal Cartel Office is also conducting an investigation against Microsoft to determine whether the company has a dominant market position.
Cookies helps to fund this blog: Cookie settings