Microsoft may soon be confronted with an antitrust investigation by the European Union (EU) as discussions with the EU watchdog to resolve the issue have hit an impasse.
This development follows a complaint lodged by Salesforce-owned workspace messaging app Slack in 2020. The complaint alleges that Microsoft unfairly integrated its workplace chat and video app, Teams, into its Office product. Despite efforts to avoid an investigation, negotiations have reached a roadblock, increasing the likelihood of an EU probe.
Background
Microsoft has a history of facing penalties for violating EU competition rules, having been fined 2.2 billion euros ($2.4 billion) in the previous decade. The fines were imposed due to practices such as tying or bundling multiple products together. In 2017, Microsoft introduced Teams as a free addition to Office 365, ultimately replacing Skype for Business.
Complaint by Slack and Initial Discussions:
The EU antitrust investigation stems from a complaint filed by Slack in 2020. Slack alleges that Microsoft obscures the “true cost” for enterprise customers by bundling Teams with the Microsoft 365 suite and mandating its installation on devices. Slack called on regulators to require Microsoft to remove Teams from the suite and offer it separately at fair commercial prices. As a response, Microsoft initiated talks with the European Commission to prevent an investigation.
Stalled Negotiations and EU’s Demands:
Despite Microsoft’s efforts to find a solution,according to Reuters, negotiations with the EU watchdog have reportedly encountered difficulties, indicating the possible initiation of an antitrust investigation. Microsoft recently proposed reducing the price of its Office product by excluding the Teams app. However, the European Commission is seeking a more significant price reduction, which Microsoft has yet to agree upon. The EU executive has refrained from commenting on the ongoing situation. A Microsoft spokesperson said: “We continue to engage cooperatively with the Commission in its investigation and are open to pragmatic solutions that address its concerns and serve customers well”.
Regulatory Scrutiny of Tech Companies:
The potential EU antitrust investigation against Microsoft reflects the growing regulatory scrutiny faced by large technology companies. Microsoft’s acquisition of Activision-Blizzard for $75 billion has also attracted scrutiny from regulators, which is still under review in the U.K. and the U.S. The European Union approved the deal in May with certain conditions.
