Brusels, Belgium - The European Union Tuesday accused Microsoft of breaching competition rules. In a formal statement of objections, the bloc said it suspects the software giant of abusing antitrust rules by bundling its real-time comms and collaboration tool, Teams, with popular productivity apps, including its cloud-based suites for businesses Office 365 and Microsoft 365.

Just over a year ago, the EU antitrust probe into Microsoft's bundling of Teams opened in July 2023 — two years after a complaint by Teams rival Slack.

As mentioned above, late last year in August, Microsoft said it would partially unbundle Teams and started to enforce this step in April 2024. However, announcing preliminary conclusions of its investigation on Tuesday, the European Commission said that it believes the steps taken by Microsoft were too little too late and the company needs to do more.

The Commission said it is worried that since at least April 2019, Microsoft tied Teams with its core SaaS productivity applications, thus limiting competition on the market for communication and collaboration products and shielding its market position in productivity software and its suites-centric model from competing suppliers of individual software, the Commission wrote in a press release.

The EU suspects Microsoft's bundling has given Teams a "distribution advantage" over rival offerings such as Slack. The Commission believes its preliminary view is also that this may have been made worse by interoperability limitations between the competitors of Teams and Microsoft offerings. "The conduct may have prevented Teams' rivals from competing, and in turn innovating, to the detriment of customers in the European Economic Area," it adds.

It's not just messaging apps like Slack that may have felt the sting. As we talked about earlier this year, video conferencing companies like Zoom probably have also taken a hit over time from how Microsoft has packaged Teams-an all-in-one offering that packages messaging, voice and video calls, and conferencing for users. Indeed, since Slack filed its complaint, the EU noted, it's received another complaint from German videoconferencing provider alf aws GmbH, which raised "similar concerns regarding the distribution of Teams." The proceedings it has now opened against Microsoft will take account of both Slack's and alf's complaints.

A formal finding of a breach of EU competition rules could result in a fine of as much as 10% of annual turnover worldwide. It could also decree remedies if it concluded steps were necessary to restore competition.

Microsoft has been contacted for comment.

The statement of objections opens up a new phase in the investigation, and Microsoft will be invited to respond to the preliminary findings by the EU so the final outcome cannot be predicted. There is also no fixed timeline for EU enforcers to complete their investigations.

Addressing the development in a statement, Sabastian Niles, president and chief legal officer at Salesforce-the CRM giant that acquired Slack at the end of 2020-said: "The Statement of Objections issued today by the European Commission is a win for customer choice and an affirmation that Microsoft's practices with Teams have harmed competition.". We appreciate this complaint from Slack receiving diligent attention from the Commission, and we hope the Commission would take it as an opportunity to move forward towards a swift, binding, and effective remedy that allows free and fair choice and reinforces competition, interoperability, and innovation in the digital ecosystem.