Microsoft has unveiled significant new commitments to unbundle its Teams communication application from its Office 365 and Microsoft 365 software suites within the European Union. This move aims to resolve a long-standing EU antitrust investigation. The company also plans to align its global software offerings and pricing if these commitments are accepted.
The technology giant’s proposals include offering versions of its popular productivity software without Teams at a reduced price. Notably, customers will be able to switch to these unbundled versions even under existing contracts. Microsoft also pledged improved interoperability for competing services and easier data migration out of Teams. Nanna-Louise Linde, Microsoft’s Vice President for European Government Affairs, stated in a blog post that following constructive discussions with the European Commission, the company believes the commitments “represent a clear and complete resolution to the concerns raised by our competitors and will provide European customers with more choices,” adding they are hopeful for a final Commission decision in the coming months.
Path to Unbundling Paved by EU Pressure
The European Commission is now market-testing these commitments, a crucial step towards a potential settlemen. This development follows the EU’s formal antitrust charges issued in June 2024, where regulators preliminarily found Microsoft might have given Teams an “undue advantage” by bundling it, according to a previous Winbuzzer report. The European Commission has asserted that Microsoft’s conduct, potentially dating back to April 2019 or earlier, aimed to defend its market position in productivity software.
The formal EU investigation was launched in July 2023, largely prompted by a 2020 complaint from Slack. Slack, now owned by Salesforce, alleged that Microsoft “illegally tied” its Microsoft Teams product to Office and is “force installing it for millions, blocking its removal, and hiding the true cost to enterprise customers.” Microsoft had made previous attempts to address these concerns. In 2023, Microsoft offered Office without Teams for 2 euros less and Teams as a standalone product for 5 euros a month, later widening this price difference after rivals deemed the initial offer insufficient. Following the 2024 charges, Microsoft President Brad Smith had stated the company would work to find solutions to the Commission’s remaining concerns.
Commitments Under the Microscope
Microsoft’s proposed commitments are extensive. They are set to remain in force for seven years, with interoperability and data portability obligations lasting for ten years, all under the supervision of an independent trustee, the European Commission outlined. Despite these measures, Salesforce remains critical. Sabastian Niles, Salesforce’s president and chief legal officer, emphasized that Microsoft’s anticompetitive practices with Teams “have harmed competition and require a binding, enforceable, and effective remedy”, adding that his company “will carefully scrutinize Microsoft’s proposed commitments.”
Nevertheless, EU regulators are reportedly likely to accept Microsoft’s current offer, a move that could help the company avoid a substantial antitrust fine. Margrethe Vestager, the EU’s former competition chief, had previously underscored the necessity of ensuring competitive markets where companies can freely choose the products best suiting their needs.
Broader Implications for Tech Regulation
This landmark case is indicative of the European Union’s ongoing efforts to regulate Big Tech companies and curb anti-competitive practices, particularly concerning the bundling of services. The EU has a history of taking action against Microsoft, including past rulings related to the bundling of Windows Media Player and Internet Explorer with its Windows operating system.
The final outcome of this investigation and the effectiveness of Microsoft’s commitments could establish a significant precedent for how technology corporations globally are permitted to package and sell their integrated software services. It highlights a continuous push by regulatory bodies to foster innovation and protect consumer choice.
