In a statement, the EC said the investigation would examine whether Microsoft had breached the European Union's competition rules "by tying or bundling its communication and collaboration product Teams to its popular suites for businesses Office 365 and Microsoft 365".
It said Microsoft had included Teams in its "well-entrenched cloud-based productivity suites for business customers Office 365 and Microsoft 365".
Margrethe Vestager, executive vice-president in charge of competition policy, said: "Remote communication and collaboration tools like Teams have become indispensable for many businesses in Europe.
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The EC statement said: "The commission is concerned that Microsoft may be abusing and defending its market position in productivity software by restricting competition in the European Economic Area for communication and collaboration products," the statement said.
"In particular, the commission is concerned that Microsoft may grant Teams a distribution advantage by not giving customers the choice on whether or not to include access to that product when they subscribe to their productivity suites and may have limited the interoperability between its productivity suites and competing offerings.
"These practices may constitute anti-competitive tying or bundling and prevent suppliers of other communication and collaboration tools from competing, to the detriment of customers in the EEA.
Contacted for comment, a Microsoft spokesperson said: “We respect the European Commission’s work on this case and take our own responsibilities very seriously. We will continue to co-operate with the commission and remain committed to finding solutions that will address its concerns.”
The EC statement said Slack Technologies had lodged a complaint on 14 July 2020, claiming that Microsoft was illegally bundling Teams with its productivity suites.
Update, 29 July: In a statement, the North American-based Coalition for Fair Software Licensing backed the EC move.
The group's executive director, Ryan Triplette, said: “Microsoft is leveraging its dominant desktop and productivity products to compel the adoption of not only Teams, but its other products offered throughout the cloud stack – including Active Directory, Azure, OneDrive, and Defender. The EU's announcement is an important first step, but this behaviour extends well beyond Teams.
“As we outlined in our recent submission to the FTC, our members experience the same anti-competitive behaviour in the cloud as the software giant uses its Microsoft 365 suite to drive up costs and limit customer choice. This is Microsoft’s playbook–leveraging its monopoly power in one market to distort competition in another.
“We applaud the European Commission for launching a formal investigation into Microsoft’s anti-competitive behavior. We encourage the FTC to investigate the company’s restrictive licensing and tying practices, as well as their implications for customers.”
Last month, the Coalition had called on the FTC to investigate Microsoft's licensing practices which it claims are anti-competitive.