Microsoft faces EU antitrust charges over Teams app, risks hefty fine

Microsoft (MSFT.O) faces a hefty antitrust fine after the European Commission on Tuesday accused it of illegally tying its Teams chat and video chat app to its Office product, giving it an unfair advantage over rivals such as Slack.

Microsoft (MSFT.O) faces a hefty antitrust fine after the European Commission on Tuesday accused it of illegally tying its Teams chat and video chat app to its Office product, giving it an unfair advantage over rivals such as Slack.

Eleven years after the last EU fine on Microsoft, the latest action by the EU competition body was triggered by a 2020 complaint from rival workspace messaging app Slack, owned by Salesforce (CRM.N).

It was reported in April that the EU was preparing charges.

The European Commission, which acts as the EU's competition authority, said Teams had gained a distribution advantage while limitations preventing interaction between Teams competitors and Microsoft's offerings made it even more difficult for rivals.

"Preserving competition in remote communication and collaboration tools is essential as it also fosters innovation in these markets," EU antitrust chief Margrethe Vestager said in a statement.

The U.S. tech giant had to pay €2.2 billion ($2.4 billion) in EU antitrust fines in the previous decade for tying, or bundling, two or more products together and other offenses. It risks a fine of up to 10% of its global annual turnover if convicted of the latest alleged antitrust violations.

The Commission said that the actions Microsoft had taken did not sufficiently address its concerns and that further changes were needed to restore competition.

The EU watchdog wants the company to sell Office without Teams at a lower price than it has announced, people with direct knowledge of the matter said, while rivals want clearer interoperability terms and more incentives for users to switch to them.

Microsoft President Brad Smith reiterated comments made earlier this month about the company's readiness to resolve the problem.

"Having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity provided today and will work to find solutions that address the Commission's remaining concerns," Smith said.

Salesforce President and Chief Legal Officer Sabastian Niles urged the Commission to move toward a swift, binding and effective remedy to restore a free and fair election.

German rival and whistleblower Alfaview also welcomed the Commission's charge against Microsoft.

Teams was added to Office 365 in 2017 for free and later replaced Skype for Business. Its popularity soared during the pandemic in part because of its video conferencing, but rivals said bundling the products together gave Microsoft an unfair advantage.

In April, Microsoft separated Teams from Office globally to address EU antitrust concerns and also made it easier for rivals to provide functionality with its products, but sources said the unbundling would likely not appease regulators.

Collaboration: Grupo Auge | Reuters (International).