The European Union (EU) has hit tech giant Microsoft with antitrust charges, accusing them of unfairly bundling their popular communication platform Teams with their ubiquitous Office suite. This practice, according to the EU, gives Teams an unfair advantage and stifles competition in the market for collaboration and communication tools.

The official accusation comes in the form of a “Statement of Objections” issued by the European Commission, the EU’s executive branch. This document outlines the EU’s concerns and serves as a formal notification to Microsoft. If the EU finds Microsoft guilty of breaching antitrust rules after the company’s response, they have the power to not only ban the practice but also levy a fine of up to 10% of Microsoft’s global revenue.

Microsoft attempted to pre-empt these concerns by unbundling Teams from certain Microsoft 365 packages. However, the EU considers these efforts insufficient and is demanding further changes to ensure a level playing field for competitors. Microsoft, on the other hand, has expressed a willingness to work with the Commission to address their concerns.

The investigation into Microsoft’s bundling practices was triggered in July 2023 following a complaint filed by Salesforce, a major competitor in the communication software space with their product Slack.

The EU’s core concern lies in Microsoft’s dominant position within the market for productivity software offered as a service (SaaS). By tightly bundling Teams with Office, the EU argues, Microsoft is essentially forcing customers to take Teams along with the productivity applications they need, regardless of whether they prefer a different communication platform.

Furthermore, the EU regulators point out limitations in interoperability between Teams and competitor products. This lack of seamless interaction between different platforms makes it even harder for businesses to consider alternatives to Teams, solidifying Microsoft’s dominance in the market.

The potential consequence of this dominance, according to the EU, is stifled innovation and ultimately a worse deal for European businesses. With limited competition, there’s less incentive for Microsoft to improve Teams or offer competitive pricing.