Workplace instant messaging platform Slack has filed an antitrust complaint against Microsoft in the European Union accusing the tech giant of unfairly bundling its rival Teams product with its cloud-based productivity suite.

A spokeswoman for the Commission’s competition division confirmed receipt of a complaint, telling us via email: “We confirm that we received a complaint by Slack against Microsoft. We will assess it under our standard procedures.”

We’ve also reached out to Microsoft and Slack for comment.

Per the FT, which has a statement from Slack, the company is accusing Microsoft of illegally abusing its market power by tying its competing product, Teams, to its dominant enterprise suite, Microsoft 365.

“Microsoft has illegally tied its Teams product into its market-dominant Office productivity suite, force installing it for millions, blocking its removal, and hiding the true cost to enterprise customers,” Slack said in the statement.

In further comments to the newspaper, Slack executives said they’re asking EU regulators to move quickly to “to ensure Microsoft cannot continue to illegally leverage its power from one market to another by bundling or tying products”.

Slack told the newspaper it wants the Windows maker to be forced to sell Teams separately to Microsoft 365 at a separate price, rather than bundling it with the existing suite and absorbing the cost.

Update: In a press statement about the Teams complaint, Jonathan Prince, VP of communications and policy at Slack, added: “We’re confident that we win on the merits of our product, but we can’t ignore illegal behavior that deprives customers of access to the tools and solutions they want. Slack threatens Microsoft’s hold on business email, the cornerstone of Office, which means Slack threatens Microsoft’s lock on enterprise software.

“But this is much bigger than Slack versus Microsoft — this is a proxy for two very different philosophies for the future of digital ecosystems, gateways versus gatekeepers. Slack offers an open, flexible approach that compounds the threat to Microsoft because it is a gateway to innovative, best-in-class technology that competes with the rest of Microsoft’s stack and gives customers the freedom to build solutions that meet their needs. We want to be the 2% of your software budget that makes the other 98% more valuable; they want 100% of your budget every time.”

The complaint is not a surprise given Microsoft and Slack have been at odds for years, ever since the Redmond-based software giant announced its Teams product back in 2016. At the time Slack took out a newspaper advertisement sardonically mocking Microsoft and welcoming the competition. In the ensuing years, Microsoft’s Teams product has also grown from also-ran to legitimate competitor.

Teams most recently announced that it had reached 75 million daily active users (DAU) in April of this year, a gain of 70% from a March number of 44 million DAUs. Like many remote-work friendly products and services, Slack and Teams have seen usage gains in the wake of COVID-19 and its economic disruptions. (Both services are also rolling out new features, combating for media attention, user mindshare, and new customer accounts).

Slack’s last shared DAU number that TechCrunch could find came from March, when Slack’s CEO reported 12.5 million daily actives.

Microsoft’s competing Teams product has managed to transition from dismissed upstart, to rival, to perhaps leading competitor in the space of a few years — but with the advantage of being bundled with a dominant office suite product. Slack’s business is still growing nicely, but with the power of Microsoft’s enterprise sales channel stapled to its growing Microsoft 365 product suite, it’s not surprising to see Slack seek regulatory relief against the larger company.

Whether you agree with Slack’s antitrust take, the move is likely good business. Slack’s shares dropped after its most recent earnings report after its growth and future guidance failed to meet investor expectations (in fairness, Slack did grow 50% on a year-over-year basis, even if Wall Street was unimpressed). If Microsoft’s Teams product is eating into its famed business expansion, Slack could see its share price suffer further. So, heading off Microsoft in a region famed for active government intervention into business appears savvy.

EU competition chief Margrethe Vestager is famed for her relative alacrity in grappling with complex digital cases. Though her record when judged by outcomes remains contested.

Also noteworthy: EU lawmakers are consulting on whether to give regional antitrust regulators greater powers to intervene in digital markets when they suspect a market might be being tipped unfairly in favor of one player.

For long time tech watchers, Microsoft being accused of unfairly bundling in the EU will of course bring back plenty of memories. Although, most recently, the tech giant has been making hay out of Apple being put under formal antitrust probe in the region — with president Brad Smith claiming in a Politico video interview last month that Cupertino’s app store walls are “higher” and “more formidable” than anything it threw up in years past.

Reminder: All the way back in 2004 EU antitrust regulators slapped Microsoft with the (then) biggest ever fine — around a half billion euros — for abusing a near monopoly position with its desktop OS, Windows, to try to crush competitors in the digital media player and low end server market. So, er…

Source: TechCrunch

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