Cut Me Some Slack: Microsoft slammed with a complaint of anti-competitive practices

August 10, 2020

3 min read

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What's going on here?

Workplace messaging app Slack has filed an antitrust complaint (an action by a company that is intended to interfere with competition in any way) with the European Commission (EC) against Microsoft for unfair practices.

What does this mean?

Microsoft Teams and Slack are workplace messaging apps that provide a quick and easy way to contact team members and share documents. They act as alternatives to traditional email, with Teams, in particular, providing video conferencing software. Slack alleged that Microsoft is acting anti-competitively by bundling their Teams application with the tools provided in Office 365. This is because by combining Teams with Microsoft Office, millions of users will have the application force installed onto their devices through updates.

The combination of Teams with Office 365 means users cannot uninstall the application separately, or understand the actual cost of Teams outside the subscription bundle. This means consumers or companies would be less likely to use other video conferencing or chat software because Microsoft Teams is pre-installed for convenience. Slack feels this gives Teams an unfair advantage. With the application already installed, users would be reluctant to pay more for additional applications such as Zoom, Webex or Google Meetings.

Microsoft’s actions are pivotal because they are the dominant operating system (OS) provider for laptops and computers. Bundling Teams with Office 365 gives their own application a huge advantage over that of competitors. As a result, Microsoft is using its top position with Windows in the OS market to gain an advantage in the video conferencing software market and undermine competition, which Slack believes is in breach of European Union (EU) competition law.

What's the big picture effect?

COVID-19 has brought about a rising need to work from home and social distance. This means video-conferencing applications are increasingly necessary to ensure minimal disruption to the practice of businesses. The pandemic has afforded Slack a 40% rise in their share price, while Microsoft Teams saw an increase in users from 44m to 75m. Increasing demand for these applications therefore makes fair competition important to both companies’ success.

In asserting its case, Slack has drawn parallels with Microsoft’s previous decision to include Internet Explorer with Windows. By using its position in the OS market, Microsoft ensured users utilised its own web browsing app over that of rival companies because pre-installation meant users were less likely to download browsing applications with greater features, and was eventually fined £427m by the EU for failing to offer consumers a better choice of browsers. However, Microsoft’s integration of Teams may be a way to add value to the services it offers consumers, as greater features are included within a fixed Office 365 subscription for users. Consumers are not forcibly prevented from downloading other software to their preference. 

The complaint raises an age-old question about the dominance of huge tech companies, such as Amazon, Apple, and Microsoft, all of which have been accused of questionable practices and anti-competitive strategies. Microsoft’s actions exemplify the manner in which monopolistic companies use their position as an advantage over smaller rivals. Being a major provider of a product or service means they can force consumers to accept their offering as there are limited substitutions available. Dominant tech companies can charge users higher prices than if the market had greater competition and more choices, and make “abnormal profits”.

The EC must investigate the matter and decide whether this practice is anti-competitive and choose to either fine Microsoft once more, or take the more drastic view that Microsoft should be broken up because of its dominant position.

Report written by Evania D’souza

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