microsoft teams faces eu probe

The EU has opened an antitrust probe into Microsoft for bundling teams with its Office 365. The regulator acted on a complaint by rival Slack which accused Microsoft of anticompetitive policies.

In its release, the European Commission said, “the Commission is concerned that Microsoft may be abusing and defending its market position in productivity software by restricting competition in the European Economic Area (‘EEA’) for communication and collaboration products.”

Notably, Teams is quite popular in Europe and according to AppMagic, Europe Middle East, and Africa (EMEA) accounted for over 38% of Teams’ app downloads in the first quarter of 2023.

Microsoft teams downloads by region
Source: Statista

Barring a few exceptions, the region is the largest in terms of app downloads for Teams. In contrast, almost a third of traffic on Slack comes from the US according to SimmilarWeb.

Slack made the complaint to the EU in July 2020. During that period Teams saw an increase in demand amid the COVID-19 pandemic. Two years back, Slack called upon the Commission to expedite its probe.

This is the first time in 15 years that Microsoft faces an antitrust probe in the EU.

In its release, the Commission said that “In particular, the Commission is concerned that Microsoft may grant Teams a distribution advantage by not giving customers the choice on whether or not to include access to that product when they subscribe to their productivity suites and may have limited the interoperability between its productivity suites and competing offerings.”

EU Begins an Antitrust Probe into Microsoft Over Bundling Teams

According to Margrethe Vestager, executive vice president in charge of competition policy at the European Commission, tools like Teams and Slack have become quite important for users in Europe.

She added, “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.”

Responding to the Commission’s probe, Microsoft spokesperson Robin Koch told the Verge, “We respect the European Commission’s work on this case and take our own responsibilities very seriously.”

microsoft teams versus slack
Source: Business of Apps

Notably, while Slack had the first-mover advantage as it launched ahead of Teams’ 2017 launch, the latter has surged ahead in terms of total users. While Slack had 18 million daily active users (DAUs) in 2022 the corresponding figure for Teams was a whopping 270 million.

The EU has Been Quite Fervorous with Antitrust Probes

The EU’s competition watchdog has been quite feverous with its probe into alleged antitrust behavior and has imposed fines on multiple Big Tech companies.

Earlier this month, Sweden’s privacy regulator imposed a fine of over $1.1 million on two companies while calling upon corporations to stop using the Google Analytics tool.

Meanwhile, in what could have wide-ranging implications, the Swedish Authority for Privacy Protection (IMY) said that its ruling is not only restricted to the four companies it audited but would “provide guidance” to other companies as well.

The blog’s title “Companies must stop using Google Analytics” reflects what the IMY is trying to achieve with its ruling.

eu fine on tech companies
Source: Statista

In May, the EU fined Meta Platforms $1.3 billion for violating the region’s privacy laws. It was the biggest fine imposed by EU regulators and over 50% higher than the previous record $806 million fine in Amazon in 2021.

Meta incidentally did not launch Threads in the EU apparently over its regulatory woes with the regulators there.

US Big Tech companies especially Amazon, Meta Platform, and Alphabet have been at odds with European regulators over multiple issues.

Notably, Nvidia’s merger with Arm Holdings was called off amid opposition in the UK. The country’s regulators also blocked Microsoft’s acquisition of Activision Blizzard.

Microsoft has Welcomed EU’s Work on AI Regulations

The EU is also working on AI regulations and lawmakers have voted to incorporate tougher amendments to the region’s widely anticipated AI Act which could be the first comprehensive AI regulation globally.

The EU’s upcoming AI Act would cover several aspects like biometric surveillance, recognitions, and other applications like generative AI. Microsoft is among the companies that see a big opportunity in AI and is advocating global AI regulations.

It has welcomed AI regulations efforts in the EU and said in its blog, “Strong, healthy dialogue between the tech industry, governments, businesses, academia, and civil society organizations is vital to make sure governance keeps pace with the speed at which AI is developing. Together, we can help realize AI’s potential to be a positive force for good.”

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