Microsoft faces mega fine after EU takes issue with bundling of Teams and Office

[JohnS]

It's just over twenty years ago that Microsoft lost its Antitrust suit against the US Government which forced it to allow consumers to opt-out of using internet Explorer, which was bundled with Windows up until then. It seems like the more things change, the more they stay the same!

Microsoft faces mega fine after EU takes issue with bundling of Teams and Office

By Hanna Ziady and Brian Fung, CNN, Tue June 25, 2024

A Microsoft Teams logo is displayed on a smartphone in Poland. Mateusz Slodkowski/SOPA Images/Shutterstock

London CNN — Microsoft has violated European Union antitrust laws by bundling Teams with its other popular applications for businesses, EU officials said Tuesday, marking the bloc’s latest challenge to a US tech giant.

If confirmed, the preliminary findings of an EU investigation could lead to a fine of up to 10% of Microsoft’s global revenue, which totaled $211 billion in its latest financial year.

The announcement comes a day after EU regulators accused Apple (AAPL) of breaching the bloc’s landmark Digital Markets Act, a groundbreaking law that forced big changes on dominant tech platforms after it came into force in March. Apple, which has denied wrongdoing, also faces a huge fine if the charges are confirmed.

The actions by the EU could result in changes to the way hundreds of millions of Europeans access services on some of the world’s biggest digital platforms, reflecting a big push by European lawmakers to rein in the power of Big Tech.

The European Commission, the EU’s executive arm, opened an investigation into Microsoft’s software practices almost a year ago following a complaint in 2020 by the cloud-based internal messaging app Slack, which is now owned by Salesforce (CRM).

Slack alleged that Microsoft (MSFT) had given Teams, which offers messaging, calling and video meetings, an unfair advantage by automatically including it with its Office software and thereby denying Slack an opportunity to compete on a level playing field.

The European Commission shares Slack’s worries. “We are concerned that Microsoft may be giving its own communication product Teams an undue advantage over competitors, by tying it to its popular productivity suites for businesses,” the EU’s competition chief Margrethe Vestager said in statement.

“Preserving competition for remote communication and collaboration tools is essential as it also fosters innovation on these markets. If confirmed, Microsoft’s conduct would be illegal under our competition rules,” she added.

According to the Commission, Microsoft has been forcing customers to acquire Teams by automatically including the tool in its Office 365 and Microsoft 365 suites.

The company’s advantage over rivals “may have been further exacerbated by interoperability limitations between Teams’ competitors and Microsoft’s offerings. The conduct may have prevented Teams’ rivals from competing, and in turn innovating, to the detriment of customers,” the Commission said.

Microsoft announced last year that it would stop the Teams bundling practice in Europe and extended the same commitment globally in April.

But, while the Commission acknowledged that the company had started offering “some suites without Teams,” it said it believes “more changes to Microsoft’s conduct are necessary to restore competition.”

In a statement, Microsoft President Brad Smith said: “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, meanwhile, welcomed the Commission’s findings, calling its actions “a win for customer choice and an affirmation that Microsoft practices with Teams have harmed competition.”

This story has been updated with additional information.

Source: https://edition.cnn.com/2024/06/25/tech/microsoft-teams-eu-antitrust/index.html

[Jack]

As someone who has used both Office and Teams and Windows and a plethora of Apple products - but from a very United States perspective - I'm having trouble seeing the USD20 billion damage this has caused. I admit I am only tangently interested in the outcome and have no vested interest. I realize that I do not understand hardly anything about how the economic and political world works outside of my bubble. On the face of it, this seems a bit extreme for a product(s) that have never been "free" to use with all functions enabled. It appears to strain credulity to imply that one was harmed so greatly by being forced to purchase Office - but only because they wanted Teams - that a large fine is in order.

Again, with my American perspective fully blinding my ability to reason, I do understand monopoly tactics and that laws in any country are equally important. At the same time there does appear to be the essence of a cash grab at play with some of these proceedings. My uneducated perspective again, of course.

[Li Bai]

17 hours ago, Jack said:

It appears to strain credulity to imply that one was harmed so greatly by being forced to purchase Office - but only because they wanted Teams - that a large fine is in order.

As I understand it the point of the lawsuit is that MSFT tied Teams to Office and so Teams' competitors Slack lost a lot of market share since Office is already "everywhere", plus the interoperability limitations between Teams’ competitors and Microsoft’s offerings made the purchase of their services too much unnecessary trouble. 

 

[Jack]

16 hours ago, Li Bai said:

As I understand it the point of the lawsuit is that MSFT tied Teams to Office and so Teams' competitors Slack lost a lot of market share since Office is already "everywhere", plus the interoperability limitations between Teams’ competitors and Microsoft’s offerings made the purchase of their services too much unnecessary trouble. 

Of course. That's a firm and logical argument when addressing a product that already has the majority of market share. Honestly, until my son mentioned it to me (along with something called Discord) I'd never heard of Slack in 20+ years of business and IT experience. That doesn't mean that they were not irreparably harmed by Microsoft's dominance. There must be an injured party or there is no course of action and I trust the courts to reconcile any differences of opinion.

At some point though, won't it become economically infeasible for companies to pursue business in a highly litigious environment?

[Li Bai]

Never heard of it either...

1 hour ago, Jack said:

At some point though, won't it become economically infeasible for companies to pursue business in a highly litigious environment?

I guess the point is to limit those giants' power, if those practices were not kept under control we would end up with 4 or 5 big companies owning everything as it is already the case in some fields.

[ha_banos]

The EU makes part of its living off fining big tech. I bet they build it into their business case 🤷‍♂️

I remember a time when a company I was working for wanted to reduce its ucm clear case licencing but this would have been a net loss because of all the other IBM s/w products (was,mq,db2) they were using. Reducing this licence they would lose their volume discount... 🤔