Let’s Talk About Microsoft Teams, Slack, and Antitrust (Premium)

Last night, we learned that Microsoft will agree to stop bundling Teams with Office to avoid an EU antitrust probe. But what does that even mean? And what do we know about the complaint that led to the EU investigation in the first place?

With regards to the recent news, we have precious little to go on: it originated via a single report in The Financial Times that is light on details, and no further sources have emerged to back the claim. The gut reaction here is to believe the news because FT is a professional news-gathering organization and not a rumor mill. But it’s all a bit unclear at this point.

Here’s what the report claims.

Microsoft will stop forcing customers of its popular Office software to also have its Teams video conferencing and messaging app automatically installed on their devices [and] in future, when companies buy Office, they can do it with or without Teams if they wished, but the mechanism on how to do this remains unclear.

Microsoft Teams is included with all commercial Microsoft 365 subscriptions. And my understanding was that customers who subscribed to a Microsoft 365 commercial account would not get Teams when they downloaded and installed the Office desktop suite. But apparently, that’s not true: starting in March 2019, Microsoft began installing Teams alongside the Office suite (Windows and Mac), and it also started adding Teams to those PCs that had previously installed the Office suite (on Windows only). Slack filed its complaint against Microsoft with the EU in July 2020.

The people stressed talks are still ongoing and a deal is not certain.

OK, so a deal is not imminent either.

It remains unclear if the tech giant’s offer regarding Teams will be enough to appease concerns of regulators. Slack, which has since been acquired by Salesforce, has asked EU officials to force Microsoft to sell Teams separately from its Office software.

So let’s go back and look at the original complaint. What is it that Slack was complaining about? And would this remedy in any way meet its needs?

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.

And … yikes. We’re already running into some language issues here.

Forgetting for a moment that Microsoft has recently started rebranding most of its Office products and services as Microsoft 365, Slack here is very specifically describing the Office desktop suite and not the broader Microsoft 365/Office 365 offerings. The real abuse here is coming from Microsoft licensing Microsoft 365 in various incarnations to businesses, each of which includes Teams, where the subscriptions that include Office suite access also now include Teams and, as alleged, “force installing” it on existing enrolled PCs.

Does Microsoft block the removal of Teams? I see no evidence of that. This Microsoft 365 support document notes, however, that to completely uninstall Teams, you must also uninstall the Teams Machine-Wide Installer. If you don’t, it will keep reinstalling Teams.

The bit about “hiding the true cost of Teams” is specious because it suggests that there are additional hidden costs to enterprises. Teams is simply a perk of the Microsoft 365 plans to which they subscribe. There are no hidden costs, as the existence of Teams Premium, a paid add-on, proves. There are only explicit costs. You pay for Microsoft 365. And you can optionally pay more for Teams Premium.

The most inflammatory language in the Slack complaint comes in quotes from Slack executives and should be summarily ignored by regulators for the nonsense that it is.

For example, Slack allegedly offers “an open, flexible approach … a gateway to innovative, best-in-class technology that … gives customers the freedom to build solutions that meet their needs.” Microsoft, meanwhile, “deprives customers of access to the tools and solutions they want … they want 100 percent of your budget every time.” Note that there’s nothing illegal about a business wanting to make more money.

Slack’s callback to Microsoft’s earlier antitrust troubles is also inflammatory, but wise.

“Microsoft is reverting to past behavior,” Slack general counsel David Schellhase said. “They created a weak, copycat product and tied it to their dominant Office product, force installing it and blocking its removal, a carbon copy of their illegal behavior during the ‘browser wars.’ Slack is asking the European Commission to take swift action to ensure Microsoft cannot continue to illegally leverage its power from one market to another by bundling or tying products.”

During the browser wars, Microsoft created a superior product that won in the marketplace because it was superior to its competition. Yes, the software giant hastened its competition’s failure by bundling its browser with Windows, a dominant platform. But Internet Explorer was better than Netscape Navigator, and the market spoke.

With Teams, Microsoft did initially create a Slack clone, i.e. a chat-based collaboration tool, an instant messaging service for businesses. But it quickly improved on that functionality and did exactly what it did during the browser wars by turning Teams into a platform, and the result is a product that is vastly superior to Slack and offers far more functionality. Here, again, the market has spoken: customers have really responded to Teams and turned it into the most successful Microsoft platform in decades.

What Slack seems to be asking for here is a similar solution to the one that the EU imposed on Microsoft for its web browser tying: a “ballot” screen at install time that would let customers choose between various competitive products. I’m sure that Slack believes that such a screen should include Slack and Teams, and perhaps some other competitors. But as I point out above, Teams is in a different league, and Slack doesn’t offer all the functionality that Teams does. This is not as simple as choosing one browser or another.

We should also ask some hard questions about product tying and whether Microsoft’s business practices today with Teams and Microsoft 365 constitute the same kind of abuse that the software giant committed with Windows and IE. This one is complex: where Windows defined personal computing in the late 1990s and early 2000s, enabling it to restrict trade by technical means, the market we’re talking about here—business productivity solutions—is a lot vaguer, and it’s perhaps not as easy for Microsoft to foreclose on competition as was the case with its OS.

For example, a business customer that uses Microsoft Office document formats can easily share those documents using Slack if they desire to do so; choosing Office (or Microsoft 365) doesn’t impose any technical limitations. So what Slack is arguing is primarily about money: if a customer is already paying for Microsoft 365, then why would they pay more to also use Slack when Teams exists and is given to customers as part of the price they are already paying?

Why indeed? And why would a European regulatory body draw a line determining where a U.S. technology company can and cannot add features to its product just because a Canadian software company (Slack) that was subsequently purchased by another American tech company (Salesforce) complained? Was Microsoft 365 set in stone, functionality-wise, 10 or 15 years ago?

Of course not. But maybe the bundling in question is so egregious and so expensive to Microsoft that it would only shoulder its cost to destroy a competitor. And if Microsoft is truly dominant in this market, then that abuse should be stopped.

I’m not sure where I fall on this one. In some ways, Teams was almost too successful too quickly. And as we’ve seen post-pandemic, Microsoft is suddenly starting to charge extra for Teams features that used to be included for free. If Slack were totally defeated, would Microsoft simply raise the price of Microsoft 365 to better recoup its costs? Isn’t that inevitable?

Assuming the EU finds Slack’s complaint compelling—and the European Commission has been semi-fanatical about protecting competition, especially if it believes European companies will be harmed—then I can’t imagine that decoupling Teams from the Office suite installer is in any way going to be meet its needs. Instead, Microsoft would be forced to decouple Teams from at least some of the lower-cost Microsoft 365 product editions, giving customers choice.

And you know what? Teams is already big enough to succeed on its own. There’s no way Slack prevails here, no matter the outcome.