Science & Technology

Microsoft Faces Mega Fine in EU

On Tuesday, June 25, European Union officials said that Microsoft had violated the antitrust laws of this block of countries as part of its practice of bundling Teams with other popular apps of the technology giant for business.

Microsoft Faces Mega Fine in EU

The mentioned allegations have become a challenge for the specified company, based in Redmond, Washington, in the context of its activities on the other side of the Atlantic Ocean. It is worth noting that so far any possible punishment against the technology giant belongs to the category of potential options for European regulators and is not yet what can be described as an accomplished fact.

Microsoft could face a fine of up to 10% of its global revenue if the preliminary findings of the EU investigation are confirmed. In this context, it is worth noting that the technology giant’s global revenue figure for the last financial year was fixed at $211 billion.

It is worth noting that on Monday, June 24, European regulators accused Apple of violating the EU Digital Markets Act. This law has caused major changes in the dominant technology platforms since it came into force in March. Apple also faces a heavy fine if the allegations are confirmed. The iPhone developer denies his involvement in the practice of actions that violate the norms of current EU legislation.

The present strategy of European regulators may provoke changes in the way hundreds of millions of users access services on some of the world’s largest digital platforms. In this case, there is a desire by the EU to take control of the enormous power of big technologies.

The European Commission, the EU’s executive arm, launched an investigation into the use of Microsoft software almost a year ago. The corresponding process began after the Slack cloud-based internal messaging app, which is currently part of the Salesforce ownership structure, expressed its worries.

Slack claimed that Microsoft had given Teams, which offers messaging, calls, and video meeting services, an unfair advantage by automatically adding it to the Office software. Against this background, a kind of situation of unequal opportunities has formed. Due to Microsoft’s actions, Slack was unable to compete on equal terms.

The European Commission agrees with the claims addressed to the technology giant. EU’s competition chief Margrethe Vestager has expressed concern that Microsoft may be giving its communications product Teams an undue advantage over competitors by tying it to popular business productivity suites. Moreover, she noted that preserving competition for remote communication and collaboration tools is important because it also fosters innovation in the markets. Margrethe Vestager says that confirmation of the accusations against Microsoft will mean that the actions of the technology giant are illegal from the point of view of European competition rules.

The European Commission alleges that the company forced customers to acquire Teams by automatically adding the tool to its Office 365 and Microsoft 365 suites. Also in this context, it was noted that the advantage over competitors could be enhanced by limitations on interoperability between rivals of Teams and the offerings of the technology giant. The European Commission said that Microsoft’s practices could have prevented other firms from competing and innovating to the detriment of customers.

Last year, the technology giant announced its intention to stop the Teams bundling in Europe. In April, this commitment was extended to the whole world.

The European Commission has acknowledged that Microsoft has begun to offer some suites without Teams, but at the same time, it noted the need for additional changes in the conduct of the technology giant to restore competition.

Microsoft President Brad Smith said that having unbundled Teams and taken initial interoperability steps, the company appreciates the clarity provided and will work to resolve the remaining issues.

Salesforce President and Chief Legal Officer Sabastian Niles called on the European Commission to act swiftly, binding and effectively to restore free and fair choice.

German rival and complainant Alfaview positively reacted to the statements of the European authorities regarding Microsoft’s practices.

Teams was added to Office 365 in 2017 for free. Over time, this digital product replaced Skype for Business. The popularity of Teams turned out to be on a trajectory of rapid growth during the coronavirus pandemic. To a large extent, this tendency was because at that time consumer demand for digital services providing users with the opportunity to conduct video conferences increased significantly. Competitors claim that the popularity of Teams, among other things, is due to the unfair advantage provided by Microsoft.

It is worth noting that the technology giant has been facing claims from antitrust regulators in the EU and the United States for several years. These claims concerned unfairly tied products and blocked rivals’ access to the desktop Windows software. Meanwhile, in Europe, Microsoft has not been at the center of an official domination investigation for more than a decade. In 2013, the technology giant was fined for not complying with a pledge to offer a choice of web browsers in the EU.

As we have reported earlier, US Regulators to Open Antitrust Probes Into Nvidia, Microsoft and OpenAI.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.