Commission seeks feedback on commitments offered by Microsoft over possible anticompetitive practices related to Teams

This article is brought to you in association with the European Commission.

The European Commission invites comments on commitments offered by Microsoft to address competition concerns over tying its communication and collaboration product Teams to its popular productivity applications included in its suites for businesses Office 365 and Microsoft 365, such as Microsoft Word and Microsoft Outlook.

Under the proposed commitments, Microsoft would (i) make available versions of these suites without Teams and at a reduced price; (ii) allow customers to switch to suites without Teams, including in the framework of existing contracts; (iii) offer Teams’ competitors increased interoperability with other Microsoft products; and (iv) allow customers to move their data out of Teams to facilitate  the use of competing solutions. Interested parties are invited to submit their views on Microsoft’s proposed commitments.

The Commission’s investigation

Microsoft is a global technology company offering various services, including productivity and business software, cloud computing and personal computing. Teams is a cloud-based communication and collaboration tool. It offers functionalities such as messaging, calling, video meetings, and file sharing, and brings together Microsoft’s and third party workplace tools and other applications.

Suppliers of business application software, including Microsoft, are increasingly distributing this software as Software-as-a-Service (‘SaaS’), i.e. software hosted on cloud infrastructure of the supplier’s choice. Microsoft has a suite-centric business model combining multiple types of software in a single offering. When Teams was launched, Microsoft included it by default in its widely-used SaaS productivity suites for business customers Office 365 and Microsoft 365.

Following the opening of a formal investigation in July 2023, the Commission preliminarily found (i) that Microsoft is dominant worldwide in the market for Software-as-a-Service (‘SaaS’) productivity applications for professional use; and that (ii) since at least April 2019, Microsoft has been tying Teams with its core SaaS productivity applications, in breach of Article 102 of the Treaty on the Functioning of the European Union (‘TFEU’) and Article 54 of the Agreement on the European Economic Area (‘EEA Agreement’).

The Commission preliminarily found that, by doing so, Microsoft restricted competition on the market for unified communication and collaboration products, granting Teams a competitive advantage in terms of distribution, which was exacerbated by interoperability limitations between Teams’ competitors and Microsoft’s offerings. Through its conduct, Microsoft defended its market position in productivity software and its suites-centric model from competing suppliers of individual software.

After the opening of the investigation, Microsoft introduced changes in the way it distributes Teams. In particular, Microsoft started offering some suites without Teams. The Commission preliminarily found that these changes were insufficient to address its concerns and that more changes to Microsoft’s conduct were necessary to restore competition effectively.

The proposed commitments

To address the Commission’s competition concerns, Microsoft has offered the following commitments, which build on Microsoft’s previous unilateral changes:

• To offer customers purchasing in the EEA versions of its Office 365 and Microsoft 365 suites without Teams and do so at a lower price than the one for corresponding suites that include Teams. In addition, Microsoft committed not to offer discount rates on Teams or on suites including Teams higher than those offered for suites without Teams.
• To afford customers purchasing in the EEA recurrent opportunities to switch to suites without Teams and allow for such suites to be deployed in datacentres worldwide.
• To allow Teams’ competitors and certain third parties (i) access to and effective interoperability with identified Microsoft products and services for specific functionalities, as well as (ii) to embed Office Web Applications (Word, Excel, and PowerPoint) in their own products, and to (iii) prominently integrate their products in Microsoft’s core productivity applications.
• To allow customers in the EEA to extract their Teams messaging data for use in competing solutions.

In addition, the Commission takes note that Microsoft has decided that, if the commitments are made binding, it will align its worldwide suites offers and pricing with the commitments.

The commitments offered by Microsoft would remain in force for seven years, except for interoperability and data portability obligations which would remain in force for ten years. The implementation of the commitments would be monitored by a monitoring trustee, who will also mediate in case of disputes between third parties and Microsoft. If a third party concern persists, the dispute will be subject to fast-track arbitration. The monitoring trustee will also report regularly to the Commission.

The Commission invites all interested parties to submit their views on Microsoft’s proposed commitments within one month from the publication of a summary of the proposed commitments in the EU’s Official Journal. The full text of the commitments will be available on the Commission’s competition website.

Background

On 27 July 2023, the Commission opened a formal antitrust investigation to assess whether Microsoft’s conduct in connection with the distribution of Teams violates EU competition rules. This followed complaints by Slack Technologies, Inc., now owned by Salesforce, Inc., and alfaview GmbH.

On 25 June 2024, the Commission sent a Statement of Objections informing Microsoft of its preliminary view that, since at least April 2019, Microsoft abused its dominant position in the market for SaaS productivity applications for professional use by tying Teams with its core SaaS productivity applications.

Article 102 TFEU, which can also be applied by national competition authorities, prohibits the abuse of a dominant position that may affect trade within the EU and prevent or restrict competition. The implementation of this provision is defined in Regulation 1/2003.

Article 9(1) of Regulation 1/2003 enables companies investigated by the Commission to offer commitments in order to meet the Commission’s concerns and empowers the Commission to make such commitments binding on the companies. Article 27(4) of Regulation 1/2003 requires that before adopting such decision, the Commission shall provide interested third parties with an opportunity to comment on the offered commitments (‘the market test’).

If the market test indicates that the commitments are a satisfactory way of addressing the Commission’s competition concerns, the Commission may adopt a decision making them legally binding on Microsoft. Such a decision would not conclude that there is an infringement of EU antitrust rules but would legally bind Microsoft to respect the commitments it has offered.

If Microsoft does not honour such commitments, the Commission could impose a fine of up to 10% of the company’s worldwide turnover, without having to prove an infringement of EU antitrust rules.

More information, including the full text of the commitments, will be available on the Commission’s competition website, in the public case register under case numbers AT.40721 and AT.40873.