European Commission Accuses Microsoft of Antitrust Violations, Threatens Massive Fines
Microsoft could potentially face fines of up to 10 percent of its global revenues, totaling $211 billion for fiscal year 2023.
The European Commission (EC) has found that Microsoft violated antitrust regulations in the region by leveraging its market dominance to promote a specific communication tool, potentially harming consumers and competitors. To avoid hefty fines, Microsoft has the option to request an oral hearing before the agency makes its final decision.
This judgment from the European Union comes following a complaint filed by Slack Technologies, a part of Salesforce, in 2020. The complaint alleged that Microsoft used its market influence to advance its cloud-based communication tool, “Teams.” The EC stated in a press release on June 25 that Microsoft had been integrating Teams into its cloud-productivity applications like Office 365 and Microsoft 365 since at least April 2019, thereby limiting competition in the communication and collaboration products market.
If these allegations are confirmed, Microsoft would be found to be in violation of the Treaty on the Functioning of the European Union, which prohibits the abuse of a dominant market position.
The commission has the authority to impose fines of up to 10 percent of a company’s global annual turnover for such violations. In Microsoft’s case, this could amount to significant consequences given its $211 billion revenue in fiscal year 2023.
Brad Smith, vice chair and president of Microsoft, responded to the allegations, stating that the company has taken steps to address the concerns raised by the Commission. The company has unbundled Teams from its suites in the European Economic Area and Switzerland and has committed to enhancing interoperability with third-party applications and services.
In addition to addressing Slack’s complaint, the European Commission also received a similar complaint from Alfaview GmbH, further contributing to the findings against Microsoft.
The agency has deemed Microsoft’s efforts to address concerns as insufficient, indicating that more changes to the company’s conduct are necessary to restore competition. A Statement of Objections has been sent to Microsoft, allowing the company to respond to the concerns before a final decision is made.
Salesforce has welcomed the EC’s decision, emphasizing the importance of customer choice and competition in the digital ecosystem. The company urges the commission to ensure a swift and effective remedy to promote innovation and interoperability.
Microsoft is identified as one of the seven “gatekeeper” companies under the Digital Markets Act (DMA) by the European Commission. Microsoft was given a deadline of March 7 to comply with all DMA regulations, to which the company announced steps towards compliance, including new data-handling practices to protect third-party application developers.
