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Microsoft broke antitrust rules by bundling Teams, E.U. says

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The European Union said Tuesday that Microsoft abused its market power when it folded the chat and videoconferencing program Teams into a bundle with other popular business apps, boosting its own offering over rivals like Slack and Zoom.

In a preliminary finding, the European Union told the company that these practices were “possibly abusive” and warned that it could face fines of up to 10 percent of global revenue for violations of antitrust rules. The salvo is the latest in a cascade of actions targeting the business practices of large U.S. tech companies. On Monday, the bloc accused Apple of violating its landmark new competition rules, in its first action under the new regime.

Since at least 2019, Microsoft has been including Teams in its ubiquitous suite of office programs, which include Word, Excel and the email service Outlook. The E.U. alleges that the company did not give customers a choice of whether to subscribe to Teams when they purchased other Microsoft programs. Microsoft may have further entrenched this advantage by making it difficult for competitors’ applications to work with its office software, the E.U. said.

The pandemic forced businesses to increasingly rely on tools like Teams, Slack and Zoom to facilitate remote work, but the E.U. alleges that Microsoft’s practices may have stifled innovation in communications software. The E.U. opened its investigation last year, following complaints from rivals including Slack.

“Preserving competition for remote communication and collaboration tools is essential as it also fosters innovation on these markets,” said Margrethe Vestager, the European Commission’s executive vice president for competition policy.

The E.U.’s concerns echo the landmark case that the United States government brought against Microsoft in the 1990s, which alleged the company abused its market power to give an upper hand to its internet browser.

Microsoft has built one of the most sophisticated global lobbying arms in the decades since that clash. But as it expands its reach into gaming, AI and other new technologies, the company is increasingly in regulators’ crosshairs. Earlier this month, the Department of Justice and the Federal Trade Commission reached a deal that sets the stage for antitrust probes into Microsoft and its relationship with OpenAI.

After the commission opened its investigation Microsoft made certain changes to the way it distributed Teams, such as offering some suites without it. But the E.U. concluded that those changes were insufficient.

“Having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity provided today and will work to find solutions to address the Commission‘s remaining concerns,” Microsoft President Brad Smith said in a statement Tuesday.

European regulators said Microsoft put rivals at a disadvantage because the company did not give customers the choice of whether to download Teams. The company may also have benefited from a lack of interoperability with competing communications platforms, regulators said.

Salesforce, which now owns Slack, called the European Commission’s announcement “a win for customer choice.”

“We appreciate the Commission’s thorough investigation of Slack’s complaint and urge the Commission to move towards a swift, binding, and effective remedy,” said Sabastian Niles, Salesforce’s president and chief legal officer.

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