Microsoft has recently taken significant steps to address competition concerns raised by European regulators by offering to unbundle its popular Office 365 and Microsoft 365 software suites from the Teams workplace communication application. This move comes in response to scrutiny from the European Commission, the executive arm of the European Union, which has been investigating the potential anticompetitive practices associated with the bundling of Teams with Microsoft’s widely-used productivity tools, including Word and Outlook.
On Friday, the European Commission announced that Microsoft has made a series of commitments aimed at alleviating concerns regarding the tying of Microsoft Teams to its Office productivity suite. As part of these proposals, Microsoft has pledged to make versions of Office 365 and Microsoft 365 available without Teams at a reduced price. This initiative will allow customers to select and purchase these productivity tools independently, even if they are currently under existing contracts.
In addition to unbundling, Microsoft has also committed to enhancing the interoperability of Teams with competing products. This means that customers will have greater flexibility in switching to alternative communication tools without losing access to their data. Specifically, Microsoft will allow users to migrate their data out of Teams and integrate with other competitive applications.
Nanna-Louise Linde, Microsoft’s vice president of European government affairs, expressed optimism regarding the proposed commitments. In a statement, she highlighted that these measures are the result of constructive and good-faith discussions with the European Commission over several months. Linde stated, “We believe that they represent a clear and complete resolution to the concerns raised by our competitors and will provide European customers with more choices.”
The scrutiny from the EU follows a legal claim made by Slack, a workplace messaging application, in 2020. Slack argued that Microsoft’s bundling of Teams with its Office suite constituted an abuse of market power. In 2021, Slack was acquired by Salesforce for $27.7 billion, further intensifying the competition in the workplace communication sector.
Following the European Commission's announcement, Sabastian Niles, Salesforce's president and chief legal officer, commented on the implications of Microsoft’s practices. He asserted that the Commission's actions confirm that Microsoft’s anticompetitive tactics with Teams have negatively impacted competition, necessitating a binding and enforceable remedy. Niles emphasized the importance of carefully scrutinizing Microsoft's proposed commitments to ensure they effectively address the competition concerns.
As Microsoft moves forward with its proposals to unbundle Office 365 and Microsoft 365 from Teams, the tech giant aims to foster a more competitive environment within the software industry. By enhancing customer choice and promoting interoperability with competing products, Microsoft is responding to regulatory pressures while striving to maintain its position in the market. The developments in this case will undoubtedly be closely monitored by industry stakeholders and regulators alike.
