EU continues to enforce antitrust regulations on US tech giants

EU Intensifies Antitrust Scrutiny on US Tech Giants

The European Union continues to ramp up its antitrust actions against major American technology companies. The European Commission (EC), the EU’s antitrust authority, issued charges against Microsoft for allegedly bundling its communication software Teams with other business applications like Office 365 and Microsoft 365. This practice, known as "tying," is viewed by the EC as a violation of the Treaty on the Functioning of the European Union (TFEU), which prohibits the abuse of a dominant market position. Such violations could result in fines of up to 10% of a company’s worldwide annual revenue, which for Microsoft amounted to $212 billion in 2023.

Microsoft president Brad Smith acknowledged the regulatory concerns, stating that the company had already begun disassociating Teams from its other software products. "We appreciate the additional clarity provided today and will work to find solutions to address the commission’s remaining concerns," he said.

In a parallel move, the EC notified Apple that its App Store practices contravened the newly established Digital Markets Act (DMA). The charges allege that Apple's rules unlawfully prevent software developers from informing customers about how to access content outside the App Store. Apple has defended its practices, expressing confidence that they comply with the law.

These actions underscore the EU's increasingly stringent approach towards global businesses. Since its inception in 1993, the EU has frequently taken a more aggressive regulatory stance compared to the United States. The bloc has enacted numerous laws to address issues like personal data protection, social media content regulation, and curbing the influence of Big Tech.

A History of Aggressive Regulation

The EU's regulatory framework has seen several significant milestones over the years. In 2001, the EU’s antitrust policies blocked a $42 billion merger that had already gained approval in the US. New chemical industry regulations were introduced in 2007, compelling global adherence. More recently, technological regulation has become a focal point. The General Data Protection Regulation (GDPR) of 2018 set strict guidelines on consumer privacy and imposed obligations on any company dealing with EU citizens' data. This was followed by the Digital Markets Act and Digital Services Act, both designed to curb the dominance of enormous tech companies such as Apple, Amazon, Meta, and Microsoft.

Recent Charges and Their Implications

The recent charges against Microsoft and Apple were meticulously documented in legal statements of objection. For Microsoft, the EC posited that bundling Teams with other software may have unfairly advantaged Teams by forcing customers to acquire access to it alongside other productivity applications. The EC also claimed that Microsoft imposed limitations on software interoperability, which could hinder competition, stifle innovation, and disadvantage consumers. These complaints originated in 2020 from Slack, a competitor owned by Salesforce, which accused Microsoft of misusing its market power. Microsoft has since begun to decouple Teams from its other software products globally.

Microsoft will now present its defense before a final decision is reached by the EC. The process is administrative, and appeals can be made to the European Court of Justice.