Microsoft to unbundle Teams from Office in antitrust deal with EU

Microsoft Office prices also to be cut by up to 50 per cent if you don’t want Teams

Microsoft has agreed to unbundle Teams from its Office suite of tools as part of an antitrust settlement deal with European Union regulators.

The concession comes five years after an initial complaint by Slack Technologies that the software giant’s bundling of Teams with Office gave Microsoft an unfair advantage in the market for online collaboration and communications tools. However, the European Commission only opened its formal investigation in July 2023 following talks with the company.

Slack was acquired by Salesforce for $27.7 billion in December 2020.

Under the terms of the agreement, Microsoft will offer Office 365 and Microsoft 365 suites without Teams at a reduced price in Europe, and customers running the suite with Teams on long-term licences will be able to switch to the unbundled versions.

In addition, the deal will provide interoperability for key functionalities between communication and collaboration tools that compete with Teams and certain Microsoft products and enable customers to move their data out of Teams to facilitate the use of competing solutions.

The European Commission investigation found that Microsoft was using its dominant positions in both software-as-a-service and office software to propagate Teams in breach of Article 102 of the Treaty on the Functioning of the European Union and Article 54 of the Agreement on the European Economic Area.

In short, it found that Microsoft was restricting competition for cloud-based communications and collaboration products and services, using its dominance in related markets to provide Teams with an unfair competitive advantage in terms of distribution.

This market leverage was reinforced by deliberate interoperability limitations between the Office suite and communications tools that compete with Teams.

Changes introduced by Microsoft in response to the opening of the investigation were insufficient, the European Commission ruled.

The deal covers customers across the European Economic Area. Moreover, the Commission claims that Microsoft will be aligning its Office suite line-up and pricing globally with these commitments.

“It has also decided to continue offering suites without Teams for frontline workers and to further reduce the price of its largest suite without Teams for frontline workers compared to the version with Teams,” it added.

Microsoft Teams was launched in November 2016 in direct response to the growing popularity of Slack, providing it as an extension of Office 365 Groups, combining subject-threaded chat (like Slack) with Skype, Word, PowerPoint, Excel, SharePoint and a number of other Microsoft products integrated with options for plug-ins from third parties, such as Twitter and Dropbox.