Slack, a company that builds and operates popular chat software and business collaboration tools, filed a complaint with the European Commission yesterday, accusing Microsoft of abusing its dominant position to prevent competitors from advancing in the industry. Microsoft is accused of having integrated Teams, a software similar to Slack, into its popular Office package, so that external solutions are not necessary, making it impossible for companies like Slack to compete as equals.
Also due to the coronavirus pandemic, in recent times programs to write in real time, make calls and video calls, share documents and schedule remote activities have become in great demand and used by companies, which have revised part of their organization to allow employees to work from home. The tools offered by Slack, Microsoft, Google and Zoom have become widely used and each of these companies has worked hard to promote and improve them, sometimes copying some features from competitors.
Slack
Until recently, Slack was considered to be the most promising and useful collaboration service on the market. Founded in 2014, the company first made itself known among some small US companies, especially related to the development of programs and applications, and then gradually gained greater visibility, also thanks to the possibility of being able to use its services for free, albeit with limitations and for small work groups.
In the quarter that ended last April, Slack reported revenues of $ 202 million, up 50 percent from the same period last year. It currently has more than 122,000 customers for its paid version, with annual licenses that guarantee good stability in cash flow. However, its managers are under the impression that things could have been much better if Microsoft hadn't implemented a very aggressive policy to popularize its Teams tool.
Microsoft Teams
Microsoft Teams has existed for less than three years and is an evolution of Skype for Business, an application that Microsoft had developed trying to extend the functionality of the famous program for video calls and Skype online chat, without obtaining particular successes. Like Slack, Teams allows you to write in real time and carry out video conferences, but above all it offers a tight integration with all other Microsoft Office programs such as Outlook, Word, Excel and PowerPoint, the most used software in business for the production of documents and data management.
If you have a subscription to Office, Teams is included in the price and is immediately available, and this, according to Slack managers, excludes the need to look for an alternative solution, which should also be paid for separately. This circumstance is compounded by the fact that Microsoft holds a dominant position in the productivity software industry.
Complaint
As required by European Union rules, the contents of the complaint presented by Slack to the Commission were not made public, but during a press conference the company's chief attorney, David Schellhase, explained that Slack is demanding that Teams be removed from Office, and that it be offered as a stand-alone product “at a fair price.” Microsoft replied that it was available to provide all necessary information to the Commission, without going into particular detail on the matter.
A complaint presented to the European Commission does not necessarily imply the initiation of an investigation: there are no constraints in this sense for the European institutions, which in any case in recent years have shown themselves to be very active in investigating and, if necessary, sanctioning large technology companies. Americans, which in fact hold dominant positions on the market in many sectors, such as that of online searches in the case of Google.
Antitrust laws do not in themselves prohibit a company from becoming large to the point of having a dominant position in the market, but it does provide rules and prohibitions to prevent such a company from abusing its position to hinder the business of its competitors. . As one of the largest IT companies in the world, Microsoft has had to contend with antitrust laws multiple times, with major legal initiatives in both the United States and Europe.
The precedents
The story of Slack against Teams recalls that of the “browser war” that involved Microsoft in the 1990s, while the Web and the possibility to use sites and applications (naturally more rudimentary than the current ones) directly within the programs to browse online (browsers, in fact). Microsoft believed that competing browsers, such as Netscape, could adversely affect Windows, its operating system, and thus made its Internet Explorer browser an integral part of Windows, effectively imposing it over competing solutions.
In 1998, the United States Department of Justice took Microsoft to court, accusing it of abusing its dominant position to make Internet Explorer stand out at the expense of third-party browser manufacturers, such as Netscape. In 2000, a ruling ruled that Microsoft had indeed violated the law and ordered the company to be split into two distinct companies: one would develop and manufacture Windows, while the other would be involved in products such as Office and Internet Explorer. Microsoft appealed and in 2001 reached an agreement with the Justice Department (in the middle there was the US presidential election, with the return of the Republicans to the government with George W. Bush).
The agreement allowed Microsoft to avoid a separation of its operations, as long as the company made resources and data available to allow third-party companies to produce software that better integrated with Windows and its other programs. Internet Explorer would have remained the most used browser for several years, until the arrival of Google's Chrome browser, now the most used in the world and therefore carefully observed by the antitrust authorities.
According to some observers, if things had turned out differently, Slack might not have been in a position to file a complaint against Microsoft today. In recent years, however, Microsoft has worked hard to make Office a “multiplatform” solution, so that it can be used indiscriminately on Windows, Apple operating systems, Android and through browsers with fewer constraints.
75 million users
Teams is one of the most recent additions to Office and quickly achieved remarkable success, which contributed to Microsoft's strong financial performance . In the quarter ending in June, Microsoft generated $ 38 billion in revenues, up 13 percent over the same period last year. The company surpassed analysts' forecasts, more uncertain due to the ongoing pandemic.
In April, Microsoft also announced that it has 75 million daily users accessing Teams, more than double the figure at the beginning of March. This increase was mainly affected by the rapid transition to work from home for millions of people, first to respect lockdowns and later to maintain physical distancing.
As one of his lawyers explained, Slack believes this step favored Teams due to its tight integration with Office: “They made a weaker copy of our product and tied it to their dominant product, Office, forcing it to installation and preventing their removal: a photocopy of their illegal behavior during the 'browser wars'. Slack asks the European Commission to take steps to ensure that Microsoft cannot continue to harness its power to move from one market to another, offering or tying its products together. “
Google also offers solutions for companies with GSuite products and in recent months has worked on their greater integration with Meet, its system for making video conferences. However, Google still has a small market share compared to Microsoft's in the sector, and for this reason Slack does not believe it has the same responsibilities and constraints to be respected for the protection of free competition.
Last month, a long article in the Wall Street Journal had recounted the rather conflicting relationships between Slack and Microsoft, related to the progressive expansion of Teams. Stewart Butterfield, the CEO of Slack, was quite outspoken in his point of view: “They want to kill us”.
Given the precedents and the fines imposed against some large IT companies, Slack is confident that in Europe there may be greater sensitivity on the issue and willingness to deal with it, compared to the United States. If the European Commission decides to accept Slack's complaint, it may take several months before the investigation is concluded and any action taken against Microsoft is decided.
