Microsoft Reaches an Agreement with the EU Commission

The settlement allows Microsoft to avoid a multi-million euro fine. In return, the tech giant had to concede several points of contention.

EU Competition Commissioner Margrethe Vestager noted that she was "concerned" about Microsoft's behavior. "It is important to maintain competition for communication and collaboration tools, as this also promotes innovation in these markets," she said.

Microsoft can now respond to the Commission's concerns. The stakes are high for the company. Fines for violations of competition law in the European Union can reach up to ten percent of global annual revenue, although such amounts are rare. The company generated revenue of $211 billion in the last fiscal year.

EU: Microsoft has a sales advantage through the integration of Teams

Microsoft has already made adjustments since the investigation was launched last year. For example, the company no longer offers Teams for free as part of Office 365, but markets both products separately. Top manager Brad Smith stated in an initial response that the company will seek solutions to address the Commission's "remaining concerns."

The proceedings stem from a complaint filed by the communications platform Slack in 2020. The company, which has been operating since its acquisition by Salesforce, alleged that Microsoft used bundling to “force millions of installations, block removal, and conceal the true costs from its business customers.”

The EU Commission agrees with this analysis in principle. Microsoft dominates the market for cloud-based business productivity applications, specifically Word, Excel, and PowerPoint, the statement said. By integrating Teams into this product suite, the company has gained a sales advantage.

The EU Commission has now concluded that this behavior may have discouraged Teams' competitors from innovating, and therefore to the detriment of consumers. Such a business practice violates the prohibition against abusing a dominant market position.

Competitors believe this is not an isolated incident. Take artificial intelligence (AI), for example: Microsoft is integrating its Copilot assistant into its products, "thereby repeating its tried-and-tested coupling practice," video service provider Alfaview said on Tuesday. The investigation into Teams has "a far-reaching signaling effect" for this technology.

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