Europe to probe Microsoft's bundling of Teams with Office 365

The European Commission opened a formal investigation into Microsoft on Thursday, to assess whether the tech giant had violated EU competition rules.

It said the investigation was focussed on Microsoft's bundling of its communication and collaboration tool Teams with the widely-used business software suites Office 365 and Microsoft 365.

In its announcement, the EC said the outbreak of Covid-19 accelerated the adoption of remote work practices, encouraging businesses to shift their operations to the cloud, leading to a surge in the use of cloud-based communication and collaboration software.

That facilitated the rise of new market players and innovative business models that provided customers with the flexibility to use software from multiple providers without the need for in-house data centres.

In line with industry trends, cloud-based software including Microsoft's products under scrutiny, were primarily distributed on a subscription basis.

The European Commission said its investigation would centre on Microsoft's inclusion of Teams within its Office 365 and Microsoft 365 productivity suites for business clients.

It said its concern was that Microsoft could be leveraging its dominant market position in productivity software to hinder competition within the European Economic Area (EEA) for communication and collaboration products.

A key area of focus would be whether Microsoft had provided customers with the freedom to choose whether to include access to Teams when subscribing to its productivity suites.

The EC said it suspected Microsoft's practices might have granted Teams a distribution advantage, by not offering customers the option to opt-out and potentially limiting competition from other communication and collaboration tools.

Additionally, the commission said it would be looking into the possibility that Microsoft had restricted interoperability between its productivity suites and rival offerings, which could further stifle competition and innovation in the market for communication and collaboration products within the EEA.

If the European Commission establishes that the practices indeed constitute anticompetitive tying or bundling, it could find Microsoft in breach of EU competition rules.

“Remote communication and collaboration tools like Teams have become indispensable for many businesses in Europe,” said the EC’s executive vice-president in charge of competition policy, Margrethe Vestager.

“We must therefore ensure that the markets for these products remain competitive, and companies are free to choose the products that best meet their needs.

“This is why we are investigating whether Microsoft’s tying of its productivity suites with Teams may be in breach of EU competition rules.”

Reporting by Josh White for Sharecast.com.