The European Union is poised to intensify its regulatory scrutiny of Microsoft with new antitrust charges concerning the integration of its videoconferencing app, Teams, into its broader software suite. This move marks a significant shift in Brussels' approach towards the tech giant, potentially ending a nearly decade-long period of relative regulatory peace.
Sources familiar with the matter indicated that the European Commission is finalizing a formal charge sheet against Microsoft, which could be issued within the coming weeks, The Financial Times reported. The charges center on concerns that Microsoft's bundling of Teams with its Office software suite may unfairly restrict competition by disadvantaging rival video conferencing apps.
Microsoft has previously attempted to address these concerns by offering to unbundle Teams from its Office suite not only in Europe but globally. Despite these efforts, EU officials and competitors remain unconvinced that these actions suffice to ensure a level playing field. Key issues cited include the superior compatibility of Teams with other Microsoft products and obstacles related to data portability which could deter users from switching to competing services.
The roots of this forthcoming legal challenge trace back to a complaint filed by Slack in 2020, which is now owned by Salesforce. Slack's complaint accused Microsoft of anti-competitive practices by tightly integrating Teams with its Office products to edge out competitors. Since then, Microsoft has faced escalating scrutiny over its market practices, not just in Europe but globally.
This case signals a potential end to the truce between Microsoft and EU regulators that has been in place since the company was fined 561 million euros in 2013. That fine was for failing to comply with an EU mandate to offer Windows users a choice of internet browsers, rather than pushing Microsoft's Internet Explorer.
The impending charges come as the EU also investigates whether Microsoft's $13 billion partnership with OpenAI, the creators of ChatGPT, violates competition laws. Moreover, under the new Digital Markets Act, Microsoft, along with other tech behemoths like Google and Meta, is classified as a "gatekeeper," implying additional regulatory responsibilities in Europe.
European cloud providers have also expressed concerns, accusing Microsoft of leveraging its dominant market position to coerce customers into its ecosystem, thereby stifling competition from smaller European tech companies.
If found guilty of breaching EU competition laws, Microsoft could face penalties amounting to as much as 10% of its global annual revenue, a figure that could reach into the tens of billions of dollars given its current earnings trajectory. In its latest financial report, Microsoft posted quarterly earnings of $61.9 billion, up 17% from the previous year, underscoring the scale at which it operates.
As the situation unfolds, Microsoft has expressed its intention to continue cooperating with the European Commission. "We will continue to engage with the Commission, listen to concerns in the marketplace, and remain open to exploring pragmatic solutions that benefit both customers and developers in Europe," the company stated in response to the ongoing regulatory developments.
