alfaview’s antitrust complaint with the European Commission against Microsoft

On December 17, 2021, alfaview informally filed a complaint with the European Commission to have the bundeling of Microsoft Teams and the Office 365 suite, which we consider anticompetitive, reviewed. On July 20, 2023, the official step followed in the form of an extended complaint with the European Commission against Microsoft in order to remain closely involved in the proceedings as a formal complainant. As part of the proceedings formally opened on July 27, 2023, the Commission must now examine whether the integration of the Teams conferencing service into Microsoft's Office 365 suite constitutes an antitrust violation in the sense of abusive tying.

Reason for our complaint: Tying MS Teams to Office 365

Since 2017, the year after the release of alfaview, the Teams conferencing service has been included in all Microsoft Office 365 plans. We believe that the integration of Teams into the Office suite, which is omnipresent in the B2B market, eliminates any competition in the field of video conferencing and collaboration programs. Innovative and powerful products can no longer compete on the market because Microsoft has a dominant position in the area of PC operating systems as well as office applications.

In general, companies are free to tie products together within the scope of their distribution sovereignty. However, antitrust law restricts this freedom in the case of dominant providers if the tying restricts competition on the market for the tied product. Tying it with the other applications in the Microsoft Office 365 suite creates a multipolar distribution advantage and a sales head start for Microsoft Teams, as the service has gained the same reach as Office practically overnight – an advantage that competitors cannot catch up with by means of merit competition.

The market shows that companies are no longer willing to allocate budget for video conferencing software because Teams is already included in the Office suite they license – supposedly free of charge. Fact is: Companies, schools, and public institutions that have licensed the Microsoft 365 suite must pay for the high server costs of Teams as well – regardless of whether they want to use the software or not. Video conferencing services generate continuous user/load-based server costs. We consider it anticompetitive to pass on the high costs generated by Teams also to those users of the 365 suite who do not want to use the Teams conferencing tool.

Our demands

Decoupling
With the integration of Teams into the Office 365 suite, any competition in the video conferencing and collaboration sector is eliminated. Other innovative and performant products can therefore only place themselves on the market with difficulty in the long term. Teams must therefore be decoupled from the Office 365 suite.

Cost transparency
Teams as a product must be priced transparently along real costs. Cross-financing via other products (in this case from the MS product range) is anti-competitive under the competition rules of the European Union.

Interoperability
For fair competition, it is necessary that all competitors on the market are given the same technical opportunities to make their services interoperable with Office. Even with a further development of Microsoft Teams, market participants such as alfaview must have the same opportunities as collaboration providers so that they can be used by Office users.

Advertising
Equivalent booking options with and without Teams need to be offered and advertised for all Office 365 product configurations and all business units. The fact that Teams is automatically included within Office packages puts market competitors such as alfaview at a disadvantage, as we have marketing and sales expenses to establish our software in the market. In contrast, Microsoft can make their product available to their existing customers without having to spend on marketing and sales.

Talks with Microsoft

In the light of the antitrust complaint against Microsoft at the EU Commission, bilateral talks were held on August 17, 2023 at Microsoft's request. We gladly accepted the invitation to a meeting after the EU Commission had opened the formal proceedings. We discussed the contents of the complaint with Microsoft's management and outlined our concerns.

Microsoft explained their strategic thinking on integrating Teams into Office 365 and justified the integration with the further development of Skype to Teams. In order to address our concerns in more detail and to find possible solutions, we agreed to further discuss the issue in more detail in additional video calls or face-to-face meetings.

After several rounds of discussions, both via video call and at a personal meeting at alfaview's headquarters in Karlsruhe, it has become apparent that Microsoft has no serious interest in completely untying Teams from the 365 suite and pricing the product according to its actual costs. Such a measure would be necessary to enable democratic and fair competition in the European market. Therefore, alfaview officially ended discussions with Microsoft on March 1, 2024.

"At the political level, it is essential to prevent monopolies of U.S. companies in Europe from being further consolidated and extended to new markets – after all, we need innovative and powerful companies to drive Europe's digital sovereignty. Europe will be permanently left behind by Silicon Valley tech companies if anticompetitive practices by U.S. corporations in Europe are not consistently addressed."

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