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EU Charges Microsoft with Antitrust Violations Over Teams Bundling

European Union regulators have formally charged Microsoft with illegal bundling practices involving its Teams chat app and its Office 365 and Microsoft 365 subscriptions. This marks the first antitrust charge against Microsoft in the EU in 15 years, reminiscent of previous cases involving Windows Media Player and Internet Explorer.

The European Commission alleges that Microsoft violated EU antitrust rules by tying Teams, its communication and collaboration tool, to its widely-used productivity suites, Office 365 and Microsoft 365. A statement of objections has been issued, outlining concerns that this bundling gives Teams an unfair advantage in the market.

Margrethe Vestager, the EU's competition chief, expressed concerns that Microsoft's actions may stifle competition by favoring its own product over competitors like Slack. She emphasized that such conduct, if confirmed, would breach EU competition laws. Microsoft now has the opportunity to respond to these allegations.

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Despite Microsoft's efforts to address these issues by separating Teams from Office 365 in Europe last year and subsequently making Teams a standalone app globally, the formal charges have proceeded.

In response, Microsoft has expressed its commitment to resolving the EU's concerns. Brad Smith, Microsoft's president, acknowledged the clarity provided by the Commission and pledged to work towards addressing the remaining issues.

The investigation was triggered by a complaint from Slack in July 2020, alleging that Microsoft unfairly bundled Teams with Office, making it difficult for users to opt for alternatives. This complaint led to the EU opening an antitrust probe into Microsoft's bundling practices.

Sebastian Niles, president and chief legal officer of Salesforce (Slack's parent company), hailed the statement of objections as a victory for customer choice and competition. Niles stressed the need for swift and effective remedies that promote fairness, interoperability, and innovation in the digital marketplace.

If found guilty of antitrust violations, Microsoft could face fines up to 10% of its global annual turnover and may be required to adjust its software bundling practices, similar to past remedies imposed by the EU.

This case carries significant implications for the tech industry, underscoring the EU's commitment to fostering fair competition and preventing monopolistic practices. As the investigation progresses, stakeholders across industries will closely monitor developments and potential outcomes.

June 26, 2024 2:18 p.m. 393

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