Microsoft Unbundles Teams from Office Product in Response to EU Antitrust Concerns

A view shows a Microsoft logo at Microsoft offices in Issy-les-Moulineaux near Paris, France, January 25, 2023. REUTERS/Gonzalo Fuentes

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Brussels, Aug 31 (Reuters) – Microsoft (MSFT.O) said on Thursday it would unbundle its chat and video app Teams from its Office product and make it easier for competing products to work with its software, but rivals said it may need to do more to stave off a possible EU antitrust fine.

Proposed Changes in Response to EU Investigation

The proposed changes came a month after the European Commission launched an investigation into Microsoft’s tying of Office and Teams, following a complaint by Salesforce-owned (CRM.N) competing workspace messaging app Slack in 2020. Microsoft’s moves announced on Thursday were similar to preliminary concessions that had failed to address regulatory concerns. The EU competition enforcer said it took note of the company’s announcement and declined further comment. The Commission could hit the company with formal charges in the autumn unless it beefs up its offer, people familiar with the matter told Reuters last month.

Focus on Addressing EU Concerns

Teams was added to Office 365 in 2017 for free. It eventually replaced Skype for Business and gained popularity during the pandemic due in part to its video conferencing. Microsoft’s vice president for European government affairs, Nanna-Louise Linde, said the changes seek to address two EU concerns:

• Customers should be able to choose a business suite without Teams at a price less than those with Teams included
• Interoperability should be made easier between rival communication and collaboration solutions and Microsoft 365 and Office 365 suites

Effective from Oct. 1

The changes, effective from Oct. 1, will apply in the EU and Switzerland. Microsoft’s core enterprise customers, which represent most of the company’s commercial business in Europe, will be permitted to switch to a version of Office that excludes Teams at a price 2 euros per month cheaper than with Teams. New enterprise customers can buy Teams standalone and separately for 5 euros per month. New support resources will also be introduced to help customers and independent software vendors who want to remove data from Teams and use it in another product. Microsoft will also develop a new method for hosting the Office web applications within competing apps and services similar to what it does with Teams.

Rivals Respond

Slack owner Salesforce said it had nothing to add. However, rivals say Microsoft’s offer as it stands would be unlikely to win over the EU antitrust watchdog. “This is playing to the gallery. I don’t think the Commission will appreciate it. There is nothing incremental in the offer,” an industry source said.

High Stakes for Microsoft

The stakes are high for the U.S. tech giant which racked up 2.2 billion euros ($2.40 billion) in EU antitrust fines in the previous decade for tying or bundling two or more products together, but which has since then sought a more conciliatory approach with regulators.

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Reporting by Foo Yun Chee, additional reporting by Supantha Mukherjee in Stockholm; Editing by Sharon Singleton, Peter Graff (foo.yunchee@thomsonreuters.com; +32 2 585 2866; Reuters Messaging)

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