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EU Charges Microsoft With Antitrust Violations

The European Union has charged Microsoft with antitrust violations, accusing the tech giant of unfairly bundling its Teams video conferencing app with its Office suite. 

TakeAway Points:

  • The EU has taken action against Microsoft for the first time in more than ten years, accusing it of violating competition laws by bundling Teams with Office.
  • The Digital Markets Act holds Apple accountable for its App Store policies, and repeated infractions could result in fines of up to 20% of the company’s worldwide revenue.
  • These measures, which have an effect on businesses like Meta and Google, are part of larger EU initiatives to control Big Tech and maintain fair competition.

The EU accuses Microsoft of violating antitrust laws

This marks the first significant antitrust action against Microsoft in over a decade. The European Commission, the EU’s executive arm, issued a charge sheet on Tuesday outlining concerns that Microsoft’s bundling practices give Teams an “undue advantage” over competitors like Slack and Zoom.

Margrethe Vestager, the EU’s executive vice-president in charge of competition policy, stated, “We are concerned that Microsoft may be giving its own communication product Teams an undue advantage over competitors by tying it to its popular productivity suites for business.” She added, “If confirmed, Microsoft’s conduct would be illegal under our competition rules. Microsoft now has the opportunity to reply to our concerns.”

In response, Brad Smith, Microsoft’s president, said, “Having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity provided today and will work to find solutions to address the Commission’s remaining concerns.” Microsoft had previously issued concessions in April, including plans to unbundle Teams from other software beyond Europe, but these measures were deemed insufficient by EU officials.

The charges come amid heightened scrutiny of Microsoft’s activities, including its $75 billion acquisition of Activision Blizzard and its $13 billion partnership with OpenAI. The company is also facing complaints over alleged unfair licensing agreements for cloud computing.

Apple’s App Store Policies Are Under EU Inspection

The European Commission has accused Apple of stifling competition on its App Store, marking the first time EU regulators have used the new Digital Markets Act (DMA) against a major tech company. The DMA, passed in 2022, aims to break the dominance of large technology platforms and foster competition. If found guilty, Apple could face fines of up to 10% of its global annual revenue, which could rise to 20% for repeat offenses.

Thierry Breton, the EU internal market commissioner, commented, “Apple’s new slogan should be ‘act different’. Today we take further steps to ensure Apple complies with the DMA rules.” The Commission is also investigating whether Apple’s developer fees, including a charge of 50 cents per download for apps used by more than 1 million people, breach EU rules.

Apple has made several changes to comply with the DMA, including historic updates to its iOS mobile software, App Store, and Safari web browser in the EU. 

“We are confident our plan complies with the law, and estimate more than 99% of developers would pay the same or less in fees to Apple under the new business terms we created.” the company stated.

However, Apple has delayed the introduction of artificial intelligence-enabled features on iPhones in the EU, citing uncertainty caused by the new tech rules. The company has also been fined €1.8 billion this year for stifling competition from rival music streaming services, a fine it is currently contesting in EU courts.

Wider Consequences for Big Tech

The EU’s actions against Microsoft and Apple are part of a broader effort to regulate Big Tech companies and ensure fair competition. The Digital Markets Act gives the Commission new powers for “ex-ante” regulation, allowing it to set rules in advance rather than dealing with issues retrospectively. Companies found in breach of these rules could face hefty fines, potentially in the billions of euros.

Alec Burnside, a Brussels-based partner at law firm Dechert, explained, “The new powers set rules of the road in advance, whereas the old rules deal retrospectively with any concerns.” The DMA aims to open markets for start-ups to thrive in the EU, addressing long-standing complaints from smaller companies and campaigners about anti-competitive behavior by tech giants.

The EU is also investigating other major tech companies. Facebook’s parent company, Meta, is under scrutiny for potentially undermining rivals in classified advertising, while Google faces accusations of abusing its power in the advertising tech sector. The Commission is also looking into Alphabet’s governance of its mobile app store and concerns about “self-preferencing” in search results.

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