Turning the Screws: EU v. Microsoft Teams (Premium)

What a week: On Monday, the European Commission charged Apple with violating the Digital Markets Act (DMA) rules, and today, it has turned its attention to Microsoft, for bundling Teams in Office. At a high level, these cases are obviously similar–two Big Tech firms running afoul of European Union (EU) antitrust laws–but there are likewise some important differences.

Because the Apple complaint triggered a predictable backlash from the "Apple can do no wrong" crowd, I ended up writing an editorial in which I had hoped to find a common middle ground based on common sense. Regardless of the relative success of that effort, I thought it might be interesting to approach this new Microsoft complaint from the same viewpoint.

In a nutshell, the EC says that Microsoft is violating EU antitrust laws by bundling Teams with what I'll call Office for simplicity's sake. (It's really Microsoft 365 for commercial customers, but you get the idea.) And we all know the history here: Over 20 years, Microsoft similarly bundled a new product (Internet Explorer) with a dominant product (Windows) to accelerate its competitive stance in a new market dominated by a small, third-party company (Netscape). And it faced antitrust charges in the U.S., EU, South Korea, and probably elsewhere. But the U.S. and EU cases were both notable and, in their own ways, historic.

I've already written a lot about Microsoft bundling Teams in Office, but it's been a while. That Microsoft bundled Teams in Office to accelerate its competitive stance in a–well, not exactly new but slightly different–market is, of course, undeniable. In fact, this bundling tracks with Windows/IE nicely, and in more ways than are immediately obvious. For example, just as Netscape's acquisition by AOL threw a wrench into arguments that Microsoft had made it's primary product less valuable, Slack's acquisition by Salesforce does the same here.

I should also mention that just bundling a new product for free with a dominant product doesn't necessarily lead to success for that new product. To beat Netscape, Microsoft also improved Internet Explorer dramatically over its first several versions. And if you track the respective feature sets of Netscape Navigator and IE, you will see that IE pulled ahead at some point. And Netscape made strategic mistakes: It overcomplicated its browser by making it part of a monolithic suite of apps, among other things. So there is some nuance.

With Office and Teams, I see similar parallels: Teams improved markedly over the first two to three years, and while it was absolutely inspired by Slack's focus on chat-based collaboration, it very quickly exceeded that narrow feature set and turned into an incredible software platform with apps and an app marketplace of its own.

There's this other unfortunate truth we must address as well. Yes, Microsoft saw the competitive threat from Slack, and it considered various ways in which it would respond, including acq...