Zoom Spoke With Regulators on Microsoft Competition Concerns (1)

Zoom Video Communications Inc. has met with regulators from the US, European Union and other jurisdictions to outline concerns about allegedly anticompetitive behavior by Microsoft Corp.

The communications software maker has talked with the US Federal Trade Commission, as well as competition enforcers from the EU, UK and Germany over the past year, according to a person familiar with the matter. Zoom expressed concerns about the way Microsoft gives preference to its Teams videoconferencing software through price bundling and product design, said the person, who asked not to be identified because the discussions were private.

Microsoft has been under scrutiny from the EU’s competition watchdog, which is examining whether tying Teams to business products Microsoft 365 and Office 365 breached antitrust rules. The EU probe followed a complaint that Salesforce Inc.’s messaging platform Slack made three years ago. Last week, Microsoft, the world’s largest software maker, said it would unbundle Teams in Europe beginning Oct. 1.

Germany’s Federal Cartel Office opened a probe into Microsoft in March using new powers that let the authority ban certain practices that hamper competition online. The German investigation is looking into Microsoft’s bundling of OneDrive and Teams with the company’s other productivity software, among other issues.

US and UK authorities have started initial inquiries into cloud services, an area in which Microsoft’s Azure is a major player. The UK’s digital regulator said in April that some practices by Microsoft, as well as cloud rivals Amazon.com Inc. and Alphabet Inc., might limit innovation.

“We want to be able to compete and win on the merit of our products,” a Zoom spokesperson said in a statement. “We support all efforts to promote a fair and healthy competitive environment where customers and consumers are empowered to choose what is best for them.”

A spokesperson for Microsoft declined to comment.

Though Teams is its primary competitor, Zoom had avoided the issue until this week, when Chief Executive Officer Eric Yuan said the FTC should look at Microsoft’s bundling practices. “No matter what, you’ve got to be fair,” Yuan said Tuesday during the Goldman Sachs Communacopia and Technology Conference.

The Zoom CEO compared the competition to sports, saying that even if you have a better team, you can’t win if the other side gets extra points for each shot.

After experiencing breakneck expansion during the pandemic as entire industries relied on its videoconferencing software, Zoom has struggled to continue sales growth the past two years. The San Jose, California-based company has expanded its suite of services for businesses to include internet-based phones, contact centers, scheduling and artificial intelligence assistants.

(Updates with Zoom statement in the sixth paragraph.)

To contact the reporters on this story:
Brody Ford in New York at bford61@bloomberg.net;
Leah Nylen in Washington at lnylen2@bloomberg.net

To contact the editors responsible for this story:
Sarah Frier at sfrier1@bloomberg.net

Andrew Pollack, Nick Turner

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