Microsoft unbundles Teams and Office globally to avoid antitrust fight

Microsoft is extending a move it’s already taken in the European Union (EU) to unbundle its Teams collaboration app from its Microsoft Office suite for global customers in a bid to avoid further antitrust scrutiny or litigation, both in Europe and abroad.

The company said Monday that the popular workplace collaboration app — with more than 300 million global users as of 2023 — will now be sold separately from its productivity suite worldwide.

[Related reading: In a preliminary finding published Tuesday, June 25, 2024, the European Commission said that Microsoft broke European Union competition law by bundling Teams with other Office 365 applications. The company could face a fine of up to 10% of its annual worldwide turnover.]

“To ensure clarity for our customers, we are extending the steps we took last year to unbundle Teams from M365 and O365 in the European Economic Area and Switzerland to customers globally,” a Microsoft spokesperson said in a statement.

The move was made to address “feedback from the European Commission by providing multinational companies more flexibility when they want to standardize their purchasing across geographies,” the spokesperson said.

Though figures vary by country and currency, new commercial customers now will pay in the range of $7.75 to $54.75 per user per month for Office without Teams, while Teams Standalone will cost $5.25 per user per month. When renewing their subscriptions, existing customers may continue with their current bundled plans or switch to plans without Teams. A Microsoft blog post has more information about plans and pricing.

Antitrust threat

Microsoft Teams allows corporate workers in disparate locations to hold video meetings, as well as collaborate and share files via chat. Like similar apps, Teams exploded in popularity during the COVID-19 pandemic, when many traditional office workplaces went remote.

In July 2020, Teams’ inclusion as part of the well-established and widely used Office suite drew a competition complaint from software rival Slack, now owned by Salesforce. The complaint alleged that Microsoft was engaging in the “illegal and anti-competitive practice of abusing its market dominance to extinguish competition in breach of European Union competition law” by “force installing it for millions, blocking its removal, and hiding the true cost to enterprise customers.”

In response to that complaint and subsequent threat of antitrust action by EU regulators, Microsoft publicly announced in August it would start unbundling the collaboration app from Office and Microsoft 365 packages in the European Economic Area, which includes countries in the region such as Switzerland that are not part of the EU itself.

That didn’t stop the EU from continuing to proceed with its investigation for a formal antitrust complaint against Microsoft, one that is expected to come within the next few months, according to Reuters.

Microsoft is no stranger to opening its coffers to pay EU antitrust fines, having already racked up 2.2 billion euros ($2.4 billion) in fines in the past decade for tying or bundling products together in a way that was deemed anticompetitive by regulators. If found guilty of antitrust in the case of Teams, the company risks a fine of as much as 10% of its global annual revenue.

Lip service or competitive concession?

At least one watchdog organization said that the forthcoming EU antitrust complaint and any that may follow will be warranted despite Microsoft’s unbundling move. Separating out Teams from Office is not enough to address“the systemic problems caused by its anticompetitive software licensing policies,” according to a statement by the leader of the Coalition for Fair Software (CFSL).

“By simply extending the changes offered in Europe in August 2023, this announcement pays lip service to fair competition but leaves interoperability and licensing restrictions in place that prevent true customer choice,” CFSL Executive Director Ryan Triplette said in a statement.

However, one the move by the tech giant demonstrates that it “is capable of making changes when held accountable by regulators,” he said, which could bode well for competition if further antitrust measures are taken.

Another technology expert didn’t think calling out Microsoft for antitrust was the right move for regulators, as it could set a dangerous precedent for other vendors with packaged products.

“It highlights that tightly bundling products previously (or in other geolocations or industries) sold independently and able to be operated independently are viable targets for antitrust complaints by competitors to even the playing field,” noted Claude Mandy, chief evangelist, data security at Symmetry Systems, an AI-powered data security management firm.