Highlights:
- The European Commission accepted Microsoft’s commitments to unbundle Teams from Office 365 and Microsoft 365.
- The deal makes Microsoft’s pledges legally binding for at least seven years, avoiding a heavy antitrust fine.
- Changes include reduced-price Office suites without Teams, easier switching for long-term customers, and improved interoperability.
- The case followed a 2023 complaint by Slack, now owned by Salesforce.
- Critics say Microsoft’s bundling harmed competition and denied customers choice.
The European Union has accepted binding commitments from Microsoft to unbundle its Teams communication platform from its Office software suites, sparing the company a potentially heavy antitrust fine. The move follows a lengthy investigation triggered by a complaint from rival service Slack.
EU decision
On Friday, the European Commission confirmed that Microsoft’s commitments would become legally binding under EU competition rules for a period of at least seven years. Regulators had accused the company of “abusive” tying practices by packaging Teams with Office products, a move that they said prevented rivals from competing fairly.
“With today’s decision, we make binding for seven years or more Microsoft’s commitments to put an end to its tying practices,” said Teresa Ribera, the Commission’s executive vice-president for clean, just and competitive transition.
Microsoft’s commitments
The commitments, first announced in May, require Microsoft to:
- Offer Office 365 and Microsoft 365 suites without Teams at a reduced price.
- Allow long-term licence holders to switch to versions without Teams.
- Ensure better interoperability between Teams rivals and Microsoft products.
- Facilitate the transfer of data from Teams to competing services.
Following a market test of its initial pledges, Microsoft also agreed to widen the price gap between bundles with and without Teams by 50% and to display alternatives without Teams more clearly on its websites.
“We appreciate the dialogue with the Commission that led to this agreement, and we turn now to implementing these new obligations promptly and fully,” said Nanna-Louise Linde, Microsoft’s vice-president of European government affairs.
Slack’s complaint and industry reaction
The case originated from a July 2023 complaint by Slack, which was acquired by Salesforce in 2021 for $27.7 billion. Salesforce executives argued that Microsoft’s bundling had distorted the market.
Sabastian Niles, Salesforce’s chief legal officer, welcomed the EU’s announcement, saying the ruling confirmed that Microsoft’s practices “harmed businesses, denied customers fair choice, and resulted in many years of lost competition.”
“This settlement is a meaningful step forward, and we applaud the Commission’s efforts to hold Microsoft accountable,” he added.
