Slack files EU antitrust complaint against Microsoft

The workplace messaging app Slack has filed a formal antitrust complaint against Microsoft with the EU, accusing the tech group of unfairly bundling its rival app Teams with its Office 365 tools.

The complaint accuses Microsoft of “illegal and anti-competitive practice” and of abusing its market power to eliminate rivals in an alleged breach of EU competition law.

“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 a statement.

Slack has long chafed at Microsoft for essentially giving away Teams to Office 365 users, who are then less likely to pay extra for additional chat or videoconferencing software.

But the formal antitrust complaint comes as the move to working from home raises the stakes.

Since the start of the year, Slack’s share price has risen more than 40 per cent but the company has struggled to accelerate its revenue growth.

Meanwhile, users of Microsoft Teams jumped from 44m to 75m between March and April.

Jonathan Prince, vice-president of communications and policy at Slack, said his company’s offering was of higher calibre than Microsoft’s and that it threatened the US tech giant’s “hold on business email, the cornerstone of Office”.

He said: “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.”

He added: “Slack simply wants fair competition and a level playing field.”

David Schellhase, general counsel at Slack, said: “We’re asking the EU to be a neutral referee, examine the facts and enforce the law.”

Mr Schellhase said Slack was asking Brussels to move quickly “to ensure Microsoft cannot continue to illegally leverage its power from one market to another by bundling or tying products”. 

Slack wants Brussels to force Microsoft to sell Teams separate from Microsoft Office, said a person with direct knowledge of the complaint.

The European Commission now has to review the complaint and decide on whether it will launch a formal antitrust probe. The commission said: “We confirm that we received a complaint by Slack against Microsoft. We will assess it under our standard procedures.”

Mr Schellhase said Microsoft was “reverting to past behaviour”, adding: “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 behaviour during the ‘browser wars’.”

He also said he was in talks with US regulators over a possible antitrust filing there, and that Slack wouldn’t “rule out similar actions” in other countries following the EU formal complaint.

Slack’s other main hope of outrunning Microsoft is that it can become the front end to much more than the Office 365 applications. Widely used Microsoft services such as Excel and Outlook “loom really large in the minds of executives and professionals — and pundits and analysts”, said Stewart Butterfield, Slack’s chief executive.

But modern information workers relied on hundreds of more specialised online applications, he added. Recruiters, for instance, used Slack to “review job applicants, lawyers to negotiate contracts and marketers to co-ordinate the launch of campaigns” and all had their own specialised applications that needed to be integrated into the service.

Microsoft’s last antitrust complaint in Brussels was in 2008 when the commission accused the company of leveraging its dominant position to push users to download its Internet Explorer browser by bundling it with Windows at the expense of rivals. Microsoft settled with the commission and offered users a choice of browsers, but in 2013 the EU fined the company €561m for failing to honour the promise. 

A Microsoft spokesperson said: “We created Teams to combine the ability to collaborate with the ability to connect via video, because that’s what people want . . . We’re committed to offering customers not only the best of new innovation, but a wide variety of choice in how they purchase and use the product.”

Asked about how Slack would show that Microsoft is anti-competitive and address market definitions to withstand a Microsoft attack, Mr Prince said: “It is quite clear to us that [Microsoft] are the unavoidable giant of enterprise software.”

Mr Schellhase added: “We compete with [Microsoft] every single day. We are already under attack.”