Slack accuses Microsoft of illegally harming competition with team consolidation
The grouping can be remarkably powerful strategy, perhaps even too much powerful in some cases. This strategy is at the heart of a formal antitrust complaint filed in the European Union by Soft (NYSE: WORK), alleging that Microsoft (NASDAQ: MSFT) violates competition laws by including Teams in its ubiquitous Office suite. Microsoft has become Slack’s biggest competitor amid the growing popularity of the latter platform in recent years, which only accelerated during the COVID-19 pandemic.
The complaint is also eerily reminiscent of similar skirmishes between technology companies.
Image source: Slack.
Group teams in Office
Slack CEO Stewart Butterfield has dismissed the competitive threat Microsoft posed several times since Slack went public. “There are still a lot of people choosing Slack, despite the fact that they have teams bundled together for free,” Butterfield said at the end of last year.
“We are confident that we will win on the merits of our product, but we cannot ignore illegal behavior that denies customers access to the tools and solutions they want,” said Jonathan Prince, Head of Communications and Slack policies, in a statement. “Slack threatens Microsoft’s grip on business email, the cornerstone of Office, which means Slack threatens Microsoft’s lockdown on business software.”
Teams is included with Office and often launches when a work PC is started, which Slack has argued previously has the effect of inflating Teams users and other engagement metrics. The upstart challenger alleges that Office customers cannot remove Teams and that the policy hides “the true cost to corporate customers.”
The story repeats itself
If this all sounds somewhat familiar to you, it’s because Microsoft used a similar tactic in the late 90s as Internet browsers became one of the most critical software applications for users. At the time, Microsoft took advantage of the dominance of Windows to consolidate Internet Explorer in an attempt to undermine Netscape Navigator.
Microsoft lost one of the biggest antitrust cases in US history in the browser wars, before being slapped with a $ 730 million fine by the European Commission over a decade later for a similar practice which the company attributed to a technical error. This story is not lost on Slack.
“Microsoft is going back to its past behavior,” added David Schellhase, general counsel for Slack. “They created a weak imitator product and linked it to their dominant Office product, forced it to install it and block its removal, a carbon copy of their illegal behavior during the ‘browser wars’.”
Separately, Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) The Google subsidiary was fined a massive $ 5 billion in 2018 for bundling its own services with Android. In addition to preinstalling its own applications, the search giant has reportedly used the Google Play Store as leverage to prevent smartphone makers from making smartphones running modified (“forked”) versions of Android.
In other words, there is precedent that extreme bundling strategies can in some cases violate antitrust laws when used by dominant companies. The ball is now in the European Commission’s court to see if Microsoft has once again crossed the legal limits.
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