Microsoft is no stranger to antitrust investigations, but the latest inquiries coming out of the European Union have given the tech industry (and some Microsoft customers) pause. If you’re not already familiar with Microsoft’s antitrust investigation history, here is a quick primer:
In 1998, the Justice Dept and 20 states charged Microsoft with violating antitrust laws. At the heart of the issue was whether Microsoft had used its Windows monopoly to force computer makers to exclude a browser made by Netscape on their PCs. In 2000, Judge Thomas Penfield Jackson ruled that Microsoft had unlawfully maintained its monopoly with Windows and had unlawfully tied its Internet Explorer browser to Windows. The company was ordered to break into two entities – one focused on Windows, and one focused on everything else.
This understandably sent shockwaves through the business world. However, the judge was eventually removed from the case and it was settled without a company breakup. Microsoft agreed to abide by a consent decree overseen by the new judge for five years, which was extended twice, expiring in 2011.
In December 2022, the FTC filed a lawsuit aimed at stopping the acquisition of Activision by Microsoft, arguing that Microsoft would use Activision’s popular games to suppress competition to its Xbox consoles and dominate fast-growing subscription and cloud gaming businesses. The FTC is in a difficult position, given that it lost a lower court decision and that the EU and the United Kingdom have blessed the merger.
Bundling Teams with Office Brings New Microsoft Antitrust Scrutiny
Then came the issue with Teams, which may signal that Microsoft’s streak of beating antitrust suits is ending. Following a July 2020 complaint from Salesforce-owned Slack, the European Commission launched an investigation into Microsoft’s coupling of Office and Teams, just months after a global pandemic began and the Microsoft Teams userbase started to grow rapidly.
To satisfy regulators, Microsoft proactively unbundled Teams from its Office 365 suites in October 2023 for Enterprise customers in the European Union and Switzerland. The current version of Office 365 that excludes Teams is priced 2 euros cheaper than with Teams, and new Enterprise customers can buy a standalone version of Teams for 5 euros per month.
However, it appears these changes have not done enough to satisfy regulators as the European Commission is said to be preparing a statement of objections to send to the company. Observers say Microsoft’s offer as it stands would be unlikely to win over the EU antitrust watchdog.
The stakes are high for Microsoft even as they seek a more conciliatory approach with regulators. The vendor racked up 2.2 billion euros in antitrust fines in the previous decade for tying or bundling two or more products together.
Will Microsoft’s Antitrust Investigation Woes Affect U.S. Customers?
While Microsoft’s antitrust headaches are ongoing, they are currently geographically isolated to the European Union. It’s unlikely Microsoft’s U.S. customers will feel a direct impact from these investigations and subsequent decisions/rulings anytime soon (they are renowned for operating on years-long timelines) – or at all. Antitrust cases are typically region-specific, meaning rulings in the EU primarily affect Microsoft’s operations and offerings within the European Economic Area (EEA).
However, there are possible ripple effects that could create indirect impacts. If the EU imposes significant sanctions or restrictions on Microsoft, the company could alter its global practices in a way that affects U.S. customers – whether that’s through changes to pricing, licensing, and SKUs, or something more substantial. Furthermore, EU antitrust cases can set precedents that influence future regulations.
We’ll continue to monitor the outcomes and their impact on Microsoft procurement for global enterprises.
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