Microsoft appears to have avoided a potentially large antitrust fine after EU regulators are likely to accept the company’s proposed solution, which involves no longer bundling Teams with Office in Microsoft 365. According to three insiders familiar with the matter, the EU will accept Microsoft’s proposal. This may be the result of growing tensions between the United States and the EU over the regulation of Big Tech companies.
Microsoft came under scrutiny from European competition authorities again in 2020 when Salesforce subsidiary Slack filed a complaint with the European Commission. Slack accused Microsoft of gaining an unfair advantage by bundling the chat and video app Teams with Office products. Last year, German competitor Alfaview also filed a similar complaint with the EU regulator.
Decoupling Teams and Office
In response to these complaints, Microsoft decided in 2023 to unbundle Teams from Office. The company started selling Office without Teams for €2 less than the bundle with the video app, while Teams was offered as a standalone application for €5 per month. In February, Microsoft increased this price difference even further after competitors indicated that the initial offer was insufficient.
According to sources, the European Commission will likely seek feedback from competitors and customers in the coming months before making a final decision. The outcome may still change, depending on market response. We are very curious to see whether the European Commission will take into account that Teams is now bundled with Windows 11 by default.
Better interoperability
Microsoft’s proposal also includes commitments to improve interoperability conditions, making it easier for competitors to compete effectively. This approach aligns with earlier signals Microsoft gave when it decoupled Teams from Office 365 and Microsoft 365 worldwide last year.
Long-running battle with competition authorities
This case is part of a pattern of long-running confrontations between Microsoft and regulators over product bundling. In June 2023, the EU opened an antitrust case against Microsoft for favoring Teams. This case was similar to the situation in 2004, when Microsoft was found guilty of illegally integrating Windows Media Player into Windows.
What makes the case even more complex is the political context in which it is taking place. US President Donald Trump has threatened to impose tariffs on countries that punish American companies. This threat could influence how the EU deals with American tech companies such as Microsoft.
Continued focus on Big Tech
Although Microsoft is now likely to avoid a large fine, the European Union will continue to monitor the practices of large technology companies closely. With legislation such as the Digital Markets Act (DMA), the EU has new tools at its disposal to limit the power of these companies and ensure fair competition. However, given the outcome of this investigation, it is becoming increasingly doubtful whether it will also act upon these Acts.
For competitors such as Slack and alfaview, the decision comes far too late. Microsoft has already secured a dominant position with Teams.