Microsoft may be the subject of an antitrust investigation in the European Union in the coming months, following accusations that it unfairly merged communication platform Teams into its Office software.
Following a complaint filed by Salesforce’s messaging app Slack in 2020, the European Commission launched negotiations with Microsoft last year to level the playing field and give consumers more choices.
While Microsoft offered to cut the price of Office (now advertised as Microsoft 365) if purchased without the Teams app, the EU requested a deeper price cut prompting talks to continue without a breakthrough.
“We continue to engage cooperatively with the Commission in its investigation and are open to pragmatic solutions that address its concerns and serve customers well,” a company spokesperson was cited as saying in Reuters’ report.
If the EU’s investigation finds that Microsoft breached the bloc’s antitrust rules, the company could be fined up to 10% of its global turnover.
With revenues of $198.27 billion in its fiscal year 2022, such a penalty would be a major hit to Microsoft’s business operations if not addressed in time.
However, there’s still a possibility for a remedy before the official investigation begins, the report concluded.
Over the past decade, the U.S. tech giant has been fined $2.4 billion in total for practices that breached EU antitrust rules.
Microsoft Already Facing Major Antitrust Case
In mid-January, Microsoft announced plans to acquire gaming giant Activision Blizzard to accelerate the growth of its gaming business across mobile, PC, and console platforms.
At the time, Microsoft said it would acquire Activision Blizzard for $95 per share, in an all-cash transaction valued at $68.7 billion.
However, the deal faced major concerns over hurting competition, prompting a California court to provisionally halt the planned acquisition at the behest of the United States Federal Trade Commission (FTC) which sought to halt the transaction.
The judge issued a temporary restraining order, arguing it is “vital to preserve the current state of affairs until the complaint is resolved.” The FTC is now awaiting a verdict from an in-house administrative law judge expected in August.
Unlike the United States and the United Kingdom, the European Union approved the deal nearly two months ago.
Microsoft’s Market Cap Is Expected to Surge Past $3 Trillion
Morgan Stanley analyst Keith Weiss has recently raised Microsoft’s market price target from $335 to $415. Backing his Thursday decision, Weiss noted that he saw strong growth potential for Microsoft in Enterprise Software with its generative AI.
Microsoft is Weiss’s first pick due to the company’s strong generative AI positioning and a business model that can quickly reflect demand shifts – particularly the cloud computing platform Azure.
The shares of the tech giant have surged 42.05% since the start of 2023 and achieved a growth of 236.69% in the last five years. At Thursday’s closing bell, Microsoft’s stocks rose slightly to $341.27 apiece.
