Slacks Files Antitrust Complaint Against Microsoft

Posted on July 22, 2020 by Paul Thurrott in Microsoft, Microsoft 365 with 71 Comments

Slack today filed a competition complaint against Microsoft Corporation before the European Commission, alleging that the software giant has abused its market dominance using illegal and anti-competitive business practices.

“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 vice president Jonathan Prince said in a prepared statement. “Slack threatens Microsoft’s hold on business email, the cornerstone of Office, which means Slack threatens Microsoft’s lock on enterprise software.”

Slack CEO Stewart Butterfield has been whining publicly about Microsoft Teams since its inception, arguing even as Teams overtook Slack that it was no competition to his company’s only product. But with Slack’s latest financial results disappointing investors—unlike other messaging firms, Slack hasn’t experienced explosive growth during the COVID-19 pandemic—the firm has clearly decided that it was time try the antitrust angle.

And given the antitrust investigations we’re now witnessing against Amazon, Apple, Facebook, and Google, it’s interesting to consider the merits of Slack’s complaints within the confines of the enterprise market. Does Microsoft “dominate” this market, which is not illegal, and has it wielded this power illegally?

According to Slack, Microsoft plays a gatekeeper role to its “stack” (I’d call it “ecosystem”) and wishes to be “100 percent of your software budget.” Slack, the complaint notes, just wants “2 percent.” But Microsoft’s ecosystem, such as it is, is open: There’s no barrier to entry, and Microsoft—unlike Apple on iOS—doesn’t command a vig, or fee, or any kind whenever other firms make money in this market.

What Microsoft has done, of course, is observe the success of Slack and then determine that the right course of action was to build its own competitor rather than purchase Slack and convert it into a Microsoft offering. But Microsoft Teams, which started as a Slack competitor, has long since took on much unique functionality that Slack doesn’t offer and is a platform in its own right. Teams is not “a weak, copycat product,” as Slack alleges, it is a superset of the functionality that Slack provides. Microsoft has simply out-Slacked Slack.

As to how Microsoft “forecloses competition illegally,” as the Slack complaint alleges, it is correct that Microsoft has “tied [Teams] to their dominant Office product,” by which it means that Teams is part of its broader Microsoft 365/Office 365 offerings. But it also says that Microsoft “forces installs” Teams and “blocks its removal,” which it says is “a carbon copy of their illegal behavior during the ‘browser wars.’” When Microsoft “illegally leveraged its power from one market to another by bundling or tying products.”

The European Commission says it will review the complaint and decide whether to open a formal investigation against Microsoft.

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