Microsoft has reportedly offered to change the price difference between Office and Teams in the latest twist in the EU’s ongoing antitrust probe into the tech giant.
Reuters, which cites three sources close to the story, is reporting that the Redmond-based vendor is attempting to satisfy the European Commission’s investigation into Microsoft’s allegedly anticompetitive practices to avoid a potentially substantial fine.
The issue dates back to Microsoft’s 2017 integration of Teams into Office 365, which eventually replaced Skype for Business and led Slack to file a complaint in 2020. The European Commission’s investigation into Microsoft’s competition practices formally launched in July 2023, culminating in Microsoft announcing it was unbundling Teams from Office, first in Europe and then globally in April last year, citing “feedback” from the European Commission.
However, the EU deemed these concessions insufficient and asserted that more changes to Microsoft’s conduct were necessary to restore competition.
Last June, the EU delivered a statement of objections to Microsoft over “possibly abusive” practices in bundling Teams and Office together. This meant they were examining whether bundling Teams with Office 365 and Microsoft 365—without a clear alternative—had restricted business customers’ choices.
The EU added that, if confirmed, these practices would infringe Article 102 of the Treaty on the Functioning of the European Union (‘TFEU’), prohibiting the abuse of a dominant market position. EU fines can reach up to 10 percent of a company’s global annual revenue.
“Having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity provided today and will work to find solutions to address the Commission’s remaining concerns,” Microsoft President Brad Smith told The Financial Times in response to the statement of objections.
Smith had anticipated the EU’s response. Earlier in the summer of 2024, speaking to journalists in Brussels, Smith said Microsoft was ready to take “additional steps” to address the European Commission’s concerns about its bundling of Teams and Office.
This new increased price differential between Teams and Office likely is one of Smith’s “additional steps” taken to assuage EU concerns, but whether it will have a material impact on the European Commission’s assessment of the situation remains to be seen.
According to three Reuters sources, the Commission has sought feedback from select companies, giving them until this week to respond before deciding on a formal market test. They added that Microsoft has proposed improved interoperability terms to enhance rival competition.
According to one Reuters source, if the European Commission accepts Microsoft’s offer without imposing a fine or finding wrongdoing, it could redirect resources toward its investigations into Apple and Google.
