Microsoft Unbundles Teams from Office Amidst Antitrust Probe

In response to ongoing antitrust investigations by the European Commission, Microsoft has announced plans to decouple its chat and video app, Teams, from its Office suite of products.
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The move is aimed at addressing concerns about competition and interoperability in the market. However, competitors and experts suggest that more may be needed to satisfy the regulators and avoid potential fines.

The European Commission’s investigation was triggered by a complaint from Slack, a workspace messaging app owned by CRM leader Salesforce, in 2020. The investigation focuses on Microsoft’s practice of bundling Teams with its Office products, which some critics argue gives Microsoft an unfair advantage and limits customer choice.

Microsoft’s latest announcement mirrors previous preliminary concessions that failed to alleviate regulatory concerns. The European Union’s competition watchdog noted the announcement without providing further comment. Formal charges could be brought against Microsoft in the coming months if its offer is not substantially improved, Reuters news report said.

Teams, which was integrated into Office 365 in 2017, gained significant popularity during the pandemic for its video conferencing capabilities, effectively replacing Skype for Business.

Nanna-Louise Linde, Microsoft’s Vice President for European Government Affairs, stated in a blog post, “Today we are announcing proactive changes that we hope will start to address these concerns in a meaningful way, even while the European Commission’s investigation continues and we cooperate with it.”

The changes aim to tackle two main concerns raised by the EU: allowing customers to choose an Office suite without Teams at a reduced price and enhancing interoperability between Microsoft 365 and rival communication and collaboration solutions.

The changes, set to take effect on October 1st, will be applicable in the European Union and Switzerland. Microsoft’s core enterprise customers in Europe will have the option to opt for an Office version that excludes Teams at a monthly cost €2 cheaper than the version with Teams. New enterprise customers can also purchase Teams separately for €5 per month.

To further address interoperability concerns, Microsoft will develop a new method for hosting Office web applications within competing apps and services, similar to its approach with Teams. Additionally, support resources will be introduced to assist customers and software vendors in transferring data from Teams to other products.

Despite Microsoft’s efforts, rivals and industry insiders remain skeptical about the company’s current offer appeasing the EU antitrust authorities. Some experts argue that the proposed changes are insufficient and lack the incremental progress needed to satisfy the Commission’s concerns.

For Microsoft, the stakes are significant, as it has previously incurred substantial EU antitrust fines totaling €2.2 billion ($2.40 billion) for bundling or tying products together. In recent years, the company has pursued a more cooperative approach with regulators to avoid potential penalties.