Microsoft, the U.S. tech giant, announced on Thursday that it will be unbundling its chat and videoconference service, Teams, from its Microsoft 365 productivity suite. This move comes as a response to European Union antitrust concerns. Starting from October 1st of this year, Microsoft will sell the packages without Teams at a discounted price, resulting in a €24 ($26) per year reduction in the European Economic Area (EEA) and Swiss regions. Existing customers who already have a suite with Teams can either stick with their current package or migrate to a product without the videoconferencing app.
Previously known as Office 365, the subscription-based Microsoft 365 bundle included Teams as its prized offering alongside other workplace-focused applications such as Word and Excel. Teams, which was introduced in 2017, gained immense popularity during the Covid-19 pandemic, as it facilitated text and video communication in the workplace. To further enhance user experience, Microsoft announced in March its plans to launch a new version of Teams that would be twice as fast as its predecessor.
In July, European Union regulators initiated an antitrust investigation into Microsoft’s bundling of Teams with other Office products, citing concerns over anti-competitive practices. This marked the first EU antitrust investigation into Microsoft in over a decade. Slack, a Teams competitor owned by Salesforce, had lodged a complaint in 2020 with European authorities on grounds of competitiveness. The investigation is still ongoing, and Salesforce has yet to respond to requests for comment from CNBC.
EU officials raised concerns that Microsoft’s bundling of Teams could give it a distribution advantage and limit interoperability with competing offerings. However, in response to the investigation, Microsoft has pledged to address these concerns. Along with unbundling Teams, Microsoft has committed to enhancing resources on interoperability with its Microsoft 365 and Office 365 suites. In addition, the company has promised to create mechanisms to host Office web applications within other competing apps and services.
Nanna-Louise Linde, the Vice President of Microsoft European Government Affairs, acknowledged the concerns and stated in a blog post, “We believe these changes balance the interests of our competitors with those of European business customers, providing them with access to the best possible solutions at competitive prices.” However, it is important to note that the EU investigation is still in its early stages, and further developments are likely to follow.
The European Union spokesperson responded to Microsoft’s announcement by stating, “We take note of Microsoft’s announcement. We have no further comment to make.” It appears that the EU is observing the situation closely and will assess any potential impact based on Microsoft’s proposed changes.
Aside from the EU antitrust investigation, Microsoft also faces scrutiny from U.K. regulators regarding its proposed acquisition of gaming company Activision Blizzard. The original plans were blocked due to concerns over stifling competition in the cloud gaming market. However, Microsoft recently submitted a new deal proposal, which includes fresh concessions. The U.K.’s Competition and Markets Authority now has until October 18th to study the proposal and make a decision.
Microsoft’s decision to unbundle Teams from its Microsoft 365 productivity suite demonstrates its commitment to addressing the antitrust concerns raised by the European Union. By offering packages without Teams, Microsoft aims to provide customers with more choice and competitive prices. Additionally, the company plans to enhance interoperability with its suites and competing offerings. As the EU investigation progresses, further clarity and developments are expected. Meanwhile, Microsoft’s acquisition of Activision Blizzard remains in the hands of U.K. regulators, who will carefully evaluate the new deal proposal. The technology giant is navigating through these challenges, striving to strike a balance between its business interests and regulatory compliance.
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