Microsoft to unbundle Teams from its Office suites in Europe

Microsoft today said that as of Oct. 1, it will start unbundling Teams from Microsoft 365 and Office 365 in Europe after the European Commission opened an antitrust investigation into the company.

The original competition complaint was filed by team chat software rival Slack in July 2020, alleging that Microsoft was engaging in the “illegal and anti-competitive practice of abusing its market dominance to extinguish competition in breach of European Union competition law” by tying its Teams product to the Office productivity suite, “force installing it for millions, blocking its removal, and hiding the true cost to enterprise customers.”

Microsoft had been hoping to address the concerns with the EU before a formal investigation began,  but in July those attempts by Microsoft to remedy the situation reportedly hit a roadblock, prompting the Commission to launch an antitrust probe.

“The Commission is concerned that Microsoft may be abusing and defending its market position in productivity software by restricting competition in the European Economic Area (‘EEA’) for communication and collaboration products,” the Commission said in a statement at the time.

Microsoft said it will cooperate in a “meaningful way” with the ongoing EU investigation and by announcing “proactive changes” it hopes to address these concerns, according to a statement from Nanna-Louise Linde, vice president, Microsoft European government affairs.

“These changes will impact our Microsoft 365 and Office 365 suites for business customers in the European Economic Area and Switzerland,” the company said. “They are designed to address two concerns that are central to the Commission’s investigation: that customers should be able to choose a business suite without Teams at a price less than those with Teams included; and that we should do more to make interoperability easier between rival communication and collaboration solutions and Microsoft 365 and Office 365 suites.”

As of October, Microsoft will unbundle Teams from Microsoft 365 and Office 365 in the specified regions and sell that version for $2.17 (€2) less per user per month or $26 (€24) per user per year. Teams will still be available for new enterprise customers as a standalone option, selling separately for $5.50 (€5) per user per month or $65 (€60) per year. More pricing details are available from Microsoft online.

“We believe these changes balance the interests of our competitors with those of European business customers, providing them with access to the best possible solutions at competitive prices,” Linde said, adding that Microsoft recognizes it is still in the early stages of the European Commission’s formal investigation and will “continue to engage with the Commission, listen to concerns in the marketplace, and remain open to exploring pragmatic solutions that benefit both customers and developers in Europe.”

History repeating itself

The current antitrust probe somewhat mimics an investigation launched by the European Commission in the mid-2000s that ultimately ended with Microsoft having to unbundle its Media Player offering from its Windows suite, said Alex Haffner, competition partner at UK law firm Fladgate.

“This time it appears Microsoft is taking a different tack — proactively implementing agreed measures to unbundle Teams from Microsoft Office whilst the Commission’s investigation is ongoing,” he said. It now falls to the Commission to determine whether the move is sufficient and will end the investigation.

“Affected third parties, including Slack whose complaint precipitated the original investigation and other videoconference providers who compete with Microsoft, will undoubtedly want the Commission to carefully scrutinize the small print of Microsoft’s ‘offer’ but, it does seem that a conclusion to this particular investigation is now in sight and the court-based battles of the past will be avoided here,” Haffner said.