EU Charges Microsoft for Bundling Teams and Office
Kelvin Chan (via Hacker News):
The European Commission said Monday it informed Microsoft of its preliminary view that the U.S. tech giant has been “restricting competition” by bundling Teams with core office productivity applications such as Office 365 and Microsoft 365.
The commission, the 27-nation bloc’s top antitrust enforcer, said it suspects Microsoft might have granted Teams a “distribution advantage” by not giving customers a choice on whether to have Teams when they purchased the software. The advantage might have been widened by limits on the ability of rival messaging apps to work with Microsoft software, it said.
Four years after Slack complained that Teams being bundled with Office was unfair competition, the EU has charged Microsoft with illegal bundling.
If found guilty, Microsoft could be fined as much as 10% of global revenues.
First Apple, now Microsoft. The EU is out for blood this week.
It’s not only chat-based apps like Slack that might be impacted. As we pointed out earlier this year, video conferencing companies like Zoom have also potentially been impacted over the years by how Microsoft has bundled Teams — which is an all-in-one product offering messaging, voice and video calls, and conferencing to users. Indeed, since Slack filed its complaint, the EU noted, it’s received another complaint from German company alfaview GmbH, a videoconferencing provider, which it said raised “similar concerns regarding the distribution of Teams.”
Previously:
Update (2024-06-28): John Gruber:
I can see the argument from regulatory proponents, that unbundling Teams from Office in some packages, after the fact, is too little too late. That the damage from abusing their dominant position was already done. But still, what more does the EC want?
[…]
I mean of course Microsoft had an advantage by being able to bundle Teams with Office. But Office needs something like Teams to remain relevant today.
[…]
Surely the lesson Microsoft is taking from this is not that they were wrong to bundle Teams with Office, but that they were wrong to offer their integrated service in the EU.
But I think the bundling was more about promoting Teams than about Office remaining relevant. Will the lesson for Microsoft be that they can stop the bundling in the EU now but that it was worth it?
Update (2024-07-02): Drew McCormack:
This is actually a pretty good case to demonstrate why the EU are pissed about these practices. Far from being the case that EU companies are incompetent, Skype – which dominated this space early– was a European company. Anticompetitive practices from the likes of MS ruined the whole market, such that only monopolists now have any chance, and the software is worse for it.
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> The EU is out for blood this week.
I'm sure this has nothing at all, perish the thought, to do with Vestager's second term as Commissioner for Competition ending on October 31 and a third term being completely unprecedented.
Textbook example of “too little, too late.”
Where was this years ago when it was so obviously happening? Microsoft crammed Teams down everyone’s throats harder than anything in recent memory.
EVERYONE who pays attention to tech saw this happening, and it happened fast, and worked well.
What’s the point in fining them now? Just to get money? It isn’t going to stop them from doing this again, and the damage is long since done.
"So what's the damage? Getting shit for free?"
Well, yeah. Predatory pricing is one way to unfairly push competition out of a market, and can be illegal.
"Textbook example of too little, too late."
Teams has been incredibly successful at gaining market share very quickly at the expense of competitors like Slack, but I don't think it's too late yet. We'll see what actual effect this has in the next few years.
Better late than never. It sets an important precedent, and it will put a bunch of processes in place, and hopefully make it easier the next time some big player is advising their dominance
At first it sounded like the complaint was that Teams is bundled with Office, so people had to get Office to get Teams. But Teams is available as a free, separate download, so that's not it. Are they saying that, because Teams is *also* bundled with Office, it gives Teams an unfair advantage?
My company has a site license for O365, and our installer for Mac Office doesn't include Teams, although Teams is available as a separate download from our company's O365 site. Other companies that meet with us often do so via Zoom or WebEx or whatever, and we just download the required app when it's needed.
But we also added a site license for Zoom a couple of years ago, even though Teams is included in our MS license. Zoom met a particular need better than Teams, so the bundling of Teams didn't matter.
Textbook example of “too little, too late.”
Four years seems very slow, but presumably we also want the EU investigating things before making decisions, rather than just lashing out. Perhaps 6 months would have been more appropriate?
If you’re Slack, and you have a growing number of corporate client, and in comes Microsoft with Teams, then from your perspective, Microsoft has an unfair advantage: not only can they offer Teams to existing O365 customers for free; quite a few of them were even previously O365 *and* Slack customers.
There is a legit antitrust issue here: taking an existing strong market position and using it to establish another strong market position.
However, like with the EU’s previous efforts to offer Windows without Media Player, or to require a browser choice window, I feel like they’ve missed the mark. They’ve analyzed a real problem, but not come up with a good solution.
I agree with Sören, plus Teams is also MS's "online meeting" app, so include Zoom with Slack.
My partner who works in local government has to use Teams for online meetings and e.g. all the public library online presentations use Teams, despite no one really liking it. I'm much happier at a University where we have Zoom plus Google Meet.
“If found guilty, Microsoft could be fined as much as 10% of global revenues.“
I believe that’s wrong. Same with Apple.
If Microsoft doesn’t fix what they’re doing to the commission’s liking within the time period, then they can be fined. (And they could appeal it in the courts). Realistically, it’ll probably ping pong back and for the longer than that.
Same with Apple.
@Someone else:
If you violate a law, you usually don't get let off if you mend your ways. You get punished. Why do you believe trillion dollar corporations should get a free pass?
"require a browser choice window, I feel like they’ve missed the mark"
What's the problem with browser choice windows, and what better option would you suggest?
"Word, Excel, Access (Onedrive?) are also included in Office"
Now tell me how great Microsoft's behavior in the past decades was for competition in the word processor and spreadsheet markets.
"I believe that’s wrong."
I agree. So let me go rob a bank now. If they catch me, I can just give back some of the money, keep what I already spent, and go free, right?
From what I understand the ping pong back and forth will take place after the fine had been out in escrow.
This because Apple and other big tech have a long history of being assholes.
That is also ECU 10% of global revenue is necessary. Otherwise they just pay millions to make billions.
I'm still on the fence on the browser bundling thing: on the one hand, the bundling/predatory pricing does fit the antitrust framework, but on the other hand selling a computer in the 21st century without the bootstrapping networking client that the web browser had become in practice would have severely limited the final customer's autonomy, which is not the goal. Having a built-in browser potentially even helped alternative ones get distributed! And I am deeply suspicious of "browser ballots" and the like, as these results in visibility being determined by decree, with all the pressure that entails (e.g. lobbying to obtain inclusion).
But there is no such ambiguity in this case: I don't see any situation where it was absolutely necessary for customers to have not just a messaging client (like, say, the old iChat) but in fact a whole non-federated messaging system built in, as if these customers couldn't possibly suspect the existence of such a solution if one wasn't put in front of them. Enjoy your trial and eventual fine, Microsoft, you've deserved it.
(full disclosure: I am made to use Teams at work, and while I could mostly ignore it at first, this is no longer possible in the era of Covid-19)
> What's the problem with browser choice windows
Idealistically, they're the fairest approach, especially when the order is randomized.
Realistically, it's yet another choice users have to make, and most consumers do not make choices this way, _especially_ in tech, where their number one concern is to get the annoying computer out the frigging way. Almost nobody chooses Chrome because they've tried a handful of browser and landed on it. They choose it because Google heavily advertised it, and because the neighbor kid says to install it.
>and what better option would you suggest?
If I knew, I'd run for office.
This is a tricky and interesting topic, but I'm also frustrated that we've learnt basically nothing since the "Microsoft must make their OS worse" judgment ca. 2000. I understand _how_ they ended up there, but the result was a lose-lose-lose for everyone.
@Old Unix Geek
That’s just how that commission and system works, I believe. You gotta stop using the US legal system as your benchmark... It’s not the US legal system they’re dealing with. Assuming you’re in the USA, their commission is more like our (now suddenly disempowered) “administrative state”.
And yes, a fine would go into escrow if it gets to the EU courts… similar to our US appeals process (much like Trump’s bond while he appeals).
Honestly, Apple has that cash lying around. The baseline penalty would be the opportunity cost for several years, which I’m sure is significant, unless escrow pays interest.
I mean, if I'd built an OS and really wanted people to use my bundled web browser, I'd be pissed with the EU Commission, too.
But, let's face it, the problem really is that momentum is your chief advantage as an OS (or office suite, or whatever) vendor. You might believe you have the user's best interest at heart, but you're the worst possible judge. I think a lot of people in tech just find that very hard to accept—understandably, of course. I think treating the symptoms on a case-by-case basis and not the underlying cause hasn't helped the credibility of regulators, and far, far too late to boot, but ultimately the best hope is to remove as many barriers to interoperability and competition as possible so that people aren't compelled to pay a high price for making the "wrong" choice. Just tell the user about the bundled components that you offer, or send them to your storefront or elsewhere to pick from a list, and make it so the entry requirements and order of display don't intentionally preference anyone whilst keeping the list credible and reputable. Given that the whole point of app storefronts is supposed to give customers confidence, I don't see why they couldn't do something like this, even using popularity as a metric, and this approach would generally apply to all these sorts of similar bundling concerns.
Trust me, Office does NOT need a bundled chat app to stay relevant.
People will use it for Word, Excel and PPT.
"Realistically, it's yet another choice users have to make, and most consumers do not make choices this way"
The thing is that the browser choice window does appear to work, though, despite of its poor design. Most smaller browser vendors are reporting increases in downloads and installs. I guess it's too early to say for sure, and perhaps the impact it too limited to make a big dent. But the evidence does seem to suggest that browser choice windows do make a positive impact, and could be even more effective with better design and wider deployment.
