Microsoft is reportedly set to avoid an EU fine, which would signal a dramatic conclusion to the Teams/Office bundling antitrust saga that’s been ongoing since the pandemic’s peak.
Reuters, which cited three sources close to the story, said that EU regulators are likely to accept Microsoft’s latest offer to change the pricing of its Office and Teams products. Microsoft is attempting to satisfy the European Commission’s probe and avoid a potentially hefty fine for Microsoft’s allegedly anticompetitive practices in bundling Teams and Office together.
The issue dates back to when Microsoft first integrated Teams into Office 365 in 2017, eventually replacing Skype for Business and leading Slack to file a complaint in 2020. At the heart of the issue was whether the lack of a viable, unbundled alternative had unfairly limited enterprise customers’ ability to choose competing communications platforms.
In February, Microsoft tweaked the price differential between Office and Teams to appease the European Commission, which has apparently been a decisive factor in the regulatory body’s thinking. Meanwhile, as part of its latest proposal, Reuters says that Microsoft has also offered to improve interoperability, aiming to lower the technical barriers that hinder rivals from competing effectively in the collaboration space.
According to Reuters’ sources, the European Commission is expected to consult industry stakeholders, including competitors and enterprise customers, before reaching a final verdict over the coming months. The outcome remains uncertain, as the Commission’s decision could shift depending on the results of this market test and other emerging factors.
The European Commission declined to comment to Reuters about the ongoing investigation. Microsoft had yet to respond to the publication’s requests for comment via phone or email.
The Full Microsoft Bundling and EU Antitrust Story
The European Commission’s subsequent investigation into Microsoft’s business practices formally kicked off in July 2023, resulting 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.
Yet EU regulators remained unconvinced, arguing that Microsoft’s proposed remedies failed to address their core concerns. According to the European Commission, more substantial shifts in Microsoft’s behaviour would be needed to truly level the playing field in the productivity and collaboration market.
In June last year, the EU sent a Statement of Objections to the tech giant, accusing Microsoft of potentially anticompetitive conduct by bundling Teams with its Office 365 and Microsoft 365 suites.
If these allegations were ultimately upheld, they would constitute a breach of Article 102 of the Treaty on the Functioning of the European Union (TFEU), which prohibits companies from abusing a dominant market position. Penalties under this provision are steep, and fines can reach as high as 10 percent of a company’s global annual turnover.
“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 outlined to The Financial Times in response to the statement of objections.
Smith had seemingly expected 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 take on board the Commission’s worries about its bundling of Teams and Office, foreshadowing Microsoft’s offer to improve its interoperability and tweak the price differential around the affected products.
