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Microsoft set to face EU competition charges over Teams software

Tech group’s effort to avoid action by unbundling videoconferencing app from its other software appears to have failed

Last month Microsoft offered concessions as it sought to avoid regulatory action. Photograph: Mast Irham/EPA

Javier Espinoza
Mon May 13 2024 - 10:25

The European Union is set to issue new antitrust charges against Microsoft over concerns that the software giant is undermining rivals to its videoconferencing app Teams, as EU regulators continue to target the market dominance of big tech groups.

According to three people with knowledge of the move, the European Commission is pressing ahead with a formal charge sheet against the world’s most valuable listed tech company over concerns it is restricting competition in the sector.

Last month Microsoft offered concessions as it sought to avoid regulatory action, including extending a plan to unbundle Teams from other software such as Office, not just in Europe but across the world.

However, people familiar with their thinking said EU officials were still concerned that the company did not go far enough to enable fairness in the market.

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Rivals are concerned that Microsoft will make Teams run more compatibly with its own software over other apps. They also argue that Microsoft has set the pricing of its own products in ways that give little incentive for users to choose other videoconferencing options. Another concern is the lack of data portability, which makes it difficult for existing Teams users to switch to alternatives.

The commission’s move would represent an escalation of a case that dates back to 2020 after Slack, now owned by Salesforce, submitted a formal complaint over Microsoft’s Teams.

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It also would end a decade-long truce between EU regulators and the US tech company, after a series of competition probes that ended in 2013. Back then, the EU issued a €561 million fine against Microsoft for failure to comply with a decision over the bundling of the Internet Explorer browser with its Windows operating system.

The timing of any charges could come in the next few weeks, said the people familiar with the commission’s thinking. Rivals of Microsoft and the commission are meeting this week to discuss the case, in an indication that the charges are being prepared, the people said.

However, they warned that Microsoft could still offer last-minute concessions that would derail the EU’s case, or the commission might decide to delay or scrap the charges against the company.

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Microsoft risks fines of up to 10 per cent of its global annual turnover if found to have breached the EU competition law.

The company declined to comment but referred to an earlier statement that said it would “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 commission declined to comment.

The move against Microsoft comes at a time of heightened scrutiny of its activities. The EU is also investigating whether the tech group’s $13 billion (€12 billion) alliance with ChatGPT maker OpenAI breaks competition law.

Microsoft is also part of a handful of tech companies, including Google and Meta, caught as “gatekeepers” under the new Digital Markets Act, meaning it has special responsibilities when trading in Europe.

The tech company has also faced complaints from European cloud computing providers that are concerned that Microsoft is abusing its dominant position in the sector to force users to buy its products and squashing competition from smaller start-ups in Europe. – Copyright The Financial Times Limited 2024

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