In a move to alleviate antitrust concerns raised by the European Union (EU), U.S. tech giant Microsoft has announced its decision to unbundle its chat and videoconference service, Teams, from its Microsoft 365 productivity suite. This strategic shift comes in response to the EU’s investigation into Microsoft’s bundling practices and the concerns raised by competitors, including Salesforce-owned Teams rival, Slack. This article will delve into the details of this recent development, exploring the implications for Microsoft and its customers, as well as the ongoing investigations by both the EU and the U.K. regulators.
Starting from October 1st, Microsoft will offer its Microsoft 365 packages without including Teams. This decision allows customers in the European Economic Area (EEA) and Swiss regions to purchase the suite at a discounted price, with a reduction of 24 euros ($26) per year. Existing customers who already have Teams as part of their package can either retain their current plans or choose to migrate to a product without the videoconferencing app.
Teams, initially launched in 2017, has become a widely used workplace communication tool, particularly during the Covid-19 pandemic. As the crown jewel of Microsoft’s workplace-geared app offerings, Teams was previously a prominent component of the Microsoft 365 bundle. Its popularity and success have made it a key target for antitrust concerns, both from competitors and regulators.
The European Union regulators began their investigation into Microsoft’s bundling of Teams with other Office products in July. This inquiry marks the first EU antitrust investigation into Microsoft in over a decade. Slack, a major competitor, lodged a complaint with European authorities in 2020, highlighting concerns over anti-competitive behavior. Microsoft’s alleged distribution advantage and limited interoperability between its productivity suites and competing offerings were among the issues cited by EU officials.
Microsoft’s Response and Commitments
In response to the antitrust investigation, Microsoft has pledged to enhance resources on interoperability with Microsoft 365 and Office 365, addressing concerns over limited compatibility. Furthermore, the company plans to develop mechanisms to host Office web applications within competing apps and services, promoting collaboration and product integration. Nanna-Louise Linde, vice president of Microsoft European Government Affairs, emphasized the importance of meaningful steps to address the concerns raised, acknowledging that the investigation is still in its early stages.
Balancing Interests: Competitors and European Business Customers
Acknowledging the need to balance the interests of competitors and European business customers, Microsoft asserts that their decision to unbundle Teams and offer competitive prices will provide access to the best possible solutions. The company aims to navigate the fine line between addressing antitrust concerns and maintaining customer satisfaction. While Microsoft’s recent changes are seen as a step in the right direction, the EU investigation remains ongoing, and its conclusion will shape the future landscape of the tech industry.
Beyond the EU investigation, Microsoft is also facing regulatory scrutiny in the United Kingdom. Initially, the U.K.’s Competition and Markets Authority blocked Microsoft’s plans to acquire gaming company Activision Blizzard due to concerns over competition limitations in the emerging cloud gaming market. However, Microsoft recently submitted a new deal proposal with fresh concessions. The U.K. regulators will evaluate this proposal, with a decision deadline set for October 18th.
Microsoft’s decision to unbundle Teams from its Microsoft 365 suite is a significant response to antitrust concerns raised by the European Union. By taking this step, Microsoft aims to address concerns over anti-competitive practices and limited interoperability. Furthermore, the company’s commitment to enhancing resources and developing mechanisms for collaboration demonstrates its efforts to balance the interests of competitors and European business customers. As investigations by both the EU and U.K. regulators continue, the outcomes will undoubtedly shape the future of Microsoft’s business practices and the wider tech industry.