Microsoft Corp. finds itself in hot water as its recent attempt to mitigate European Union antitrust concerns has proven to be unsuccessful. The software giant’s decision to unbundle its Teams video-conferencing app from the Office 365 and Microsoft 365 packages has failed to placate EU regulators. According to insiders, the European Commission is now preparing a formal complaint against Microsoft, which could land in the coming months.
A Refresher on the EU’s Microsoft Investigation
The EU’s investigation into Microsoft’s bundling practices began following a complaint from Salesforce’s messaging platform, Slack, three years ago. The main point of contention is Microsoft’s habit of bundling Teams with its Office 365 and Microsoft 365 packages. This, the European Commission argues, restricts competition and gives Teams an unfair distribution advantage in the European Economic Area (EEA).
Microsoft has a history of antitrust issues with the EU. In 1998, the company faced a €497 million fine for bundling Internet Explorer with its Windows OS. Again in 2013, a €561 million fine was imposed for failing to comply with the terms of a 2004 settlement regarding interoperability and bundling. The current investigation seems to be an extension of the EU’s longstanding concerns.
Microsoft’s Unsuccessful Peace Offering
In an effort to address the EU’s concerns, Microsoft announced several changes, effective from October 1, 2023:
- Unbundling Teams: Office 365 and Microsoft 365 would be offered without Teams in the EEA and Switzerland, at a slightly reduced price.
- Enhanced Interoperability: Microsoft committed to improving resources to facilitate easier development for companies like Zoom and Salesforce.
- Third-Party Hosting: Microsoft would develop methods to allow third-party solutions to host Office web applications within their competing apps and services.
Despite these proactive steps, the EU’s antitrust arm is not satisfied, signaling that Microsoft’s troubles are far from over.
Broader Implications for the Tech Industry
Microsoft’s antitrust woes come at a time when Big Tech companies are increasingly under the microscope for their competitive practices. The EU is also looking into Microsoft’s cloud infrastructure following complaints from a European cloud group with Amazon’s AWS among its members. Another complaint filed by German cloud platform NextCloud GmbH last year accuses Microsoft of unfairly bundling its OneDrive cloud system with Windows.
Furthermore, the EU is investigating Microsoft’s Bing, Edge, and Advertising services under the scope of the bloc’s Digital Markets Act. All these investigations could set precedents affecting not just Microsoft but the broader technology landscape.
What’s Next?
The EU’s formal complaint against Microsoft could bring more than just financial penalties; it could mandate changes to Microsoft’s business practices in Europe. While Microsoft has made efforts to comply with the Commission’s concerns, the incoming formal measures indicate that a more comprehensive solution will be needed to satisfy regulatory scrutiny.
As the story continues to unfold, all eyes will be on how this case shapes the regulatory landscape for Big Tech in the European Union, especially as the world becomes increasingly dependent on digital communication and collaboration tools.
