Report from Reuters
In Brief – Microsoft is likely to escape a major antitrust fine as the European Commission’s antitrust regulators are expected to accept the software giant’s improved offer to address complaints about the bundling of chat and video app Teams into Office 365. Message and collaboration app developer Slack filed an antitrust complaint with the Commission in 2020 accusing Microsoft of illegally tying Teams to Office and Windows. The Commission opened a formal investigation in mid-2023 and Microsoft soon began offering concessions to settle the issue, in particular proposing to sell versions of Office and Windows in Europe without Teams, as well as offering a stand-alone Teams product. Microsoft eventually extended that policy worldwide. Microsoft critics have argued throughout that the pricing differences between the services were not adequate, citing the fact that Office 365 without Teams was priced just €2 less per month than the plan that included Teams, while the standalone price of Teams was €5 per month, and even that was still below the price for services from top competitors. It was reported earlier this year that Microsoft offered to meaningfully widen the price differential between Office 365 with Teams and Office 365 without. The Commission is expected to test the Microsoft offer with stakeholders.
Context – The regulatory mesh surrounding Microsoft is far more advanced in Europe than in the US. The company is a “gatekeeper” under the Digital Markets Act and its Windows OS and LinkedIn are regulated as “core platform services”. Although Office 365 is not a DMA core platform, the German Federal Cartel Office has authority to regulate all Microsoft services. Microsoft pursued a government good behavior strategy that seemed especially effective in Europe in helping win approval of its huge Activision acquisition in 2023, and the company recently doubled down, publicly expressing their commitment to complying with EU laws and regulatory decisions which are often criticized by the Trump Administration, a stance that won plaudits from EU Commissioner Teresa Ribera who heads antitrust enforcement.