Microsoft avoids multi-billion EU fine in bundling package compromise

Microsoft has narrowly escaped the risk of a multibillion-euro fine after the tech giant agreed on a deal with Brussels to loosen the grip of its workplace chat service, Teams, on the professional software market.

This follows over a year of antitrust bickering, which was triggered by complaints from rival platforms. As a result, the European Commission on Friday accepted commitments regarded as binding from Microsoft.

The commitments are in relation to Microsoft being required to sell versions of its Office 365 and Microsoft 365 suites without Teams as Cryptopolitan previously reported.

Rival platforms raised concerns over Microsoft’s dominance

The investigation began in 2023 when Slack, which was then owned by Salesforce, complained to the Commission that Microsoft unlawfully bundled Teams with its dominant productivity software.

Another company, Alfaview, a German videoconferencing firm also joined the action, complaining that the arrangement gave Microsoft an unfair stranglehold on the market.

By June 2024, EU regulators had issued a preliminary finding that Microsoft was abusing its market dominance, forcing the tech giant to present a series of proposals aimed to defuse the case, which were subsequently tested by the Commission in a market consultation.

With the commitments from Microsoft, the saga has finally come to a close as Slack and Alfaview have since withdrawn their complaints.

Under the deal, Microsoft will sell Office 365 and Microsoft 365 suites without Teams at reduced prices, while continuing to offer versions that include the chat tool.

However, customers with long-term contracts will have the option to switch to “Teams-free” suites without penalty.

Microsoft has also committed to ensure that competing communication platforms can integrate with Microsoft’s software, and to give users the right to export their Teams data if they wish to move to rival services.

The concessions will remain binding for seven years, and in the case of data portability and interoperability, for a full decade.

“With today’s decision, we make binding for seven years or more Microsoft’s commitments to put an end to its tying practices that may be preventing rivals from effectively competing with Teams.”

Teresa Ribera, the Commission’s executive vice-president for competition.

“Organisations big and small across Europe and around the world rely heavily on videoconferencing, chat and collaboration tools, especially since the coronavirus pandemic,” she said.

Microsoft made a series of commitments

Microsoft, which first suggested an unbundling plan in May, has steadily improved its offer in recent months.

Part of the commitments includes raising the price gap between suites with Teams and those without by 50%, and ensuring that online advertising for Microsoft 365 packages clearly shows the equivalent version without Teams.

“We appreciate the dialogue with the Commission that led to this agreement, and we turn now to implementing these new obligations promptly and fully.”

Nanna-Louise Linde, Microsoft’s vice-president for European government affairs.

The company added that it was committed to addressing concerns “in a way that serves customers and supports a competitive environment.”

Europe has long been wary of dominant platforms using their size and reach to stifle competition. In this case, officials were concerned that Microsoft’s tactics could freeze out innovative challengers in the booming market for remote-work tools.

For Brussels, the case is about ensuring that the post-pandemic workplace is not dictated by one player.

For now, Microsoft has secured breathing space. But its rivals, emboldened by the Commission’s willingness to act, are unlikely to ease the pressure any time soon.

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