Microsoft Offers New Concessions to Address EU Concerns Over Teams and Office Integration

Microsoft has proposed a series of concessions to the European Commission in a renewed effort to address long-standing antitrust concerns surrounding the bundling of its Teams communication app with its Office productivity software.

In a statement released Friday, the European Commission confirmed that Microsoft has committed to unbundling its Office 365 and Microsoft 365 suites from Teams in the European Economic Area. This move is intended to respond to regulatory scrutiny and prevent the imposition of a potentially substantial fine by the EU’s antitrust authorities.

The controversy stems from a 2020 complaint filed by Slack, the workplace messaging platform now owned by Salesforce. Slack alleged that Microsoft’s practice of integrating Teams into its productivity suite constituted an abuse of market dominance by limiting fair competition. While Microsoft previously took steps to unbundle the products in 2023, critics said those efforts were too limited in scope. The new commitments expand on that initiative.

Under the latest proposal, Microsoft will offer Office 365 and Microsoft 365 to European customers without Teams at a lower price than versions that include it. Customers will also be able to remove Teams from their existing contracts and switch to alternative communication tools. Furthermore, Microsoft has promised enhanced interoperability for Teams’ competitors, including the ability to integrate their tools more easily with Microsoft applications like Word, Excel, and Outlook.

Competitors will also be allowed to embed Microsoft’s Office Web Applications within their own platforms and integrate their services more prominently within Microsoft’s core productivity tools. In addition, European customers will have the option to export their Teams data for use in other products, a move aimed at lowering barriers to switching platforms.

These pricing and interoperability commitments would remain in effect for seven and ten years, respectively. Microsoft has also stated its willingness to implement similar changes globally, aligning its offerings worldwide if the EU accepts its proposal.

Nanna-Louise Linde, Microsoft’s Vice President for European Government Affairs, described the commitments as a product of “constructive, good-faith discussions” with regulators.

“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,” she said.

The European Commission announced it will now conduct a “market test” to solicit feedback from competitors and customers over the next month before making a final decision on whether to accept Microsoft’s offer. If accepted, the deal could resolve the EU’s probe and prevent Microsoft from facing a fine that might have reached up to 10% of its global annual revenue.

Salesforce responded cautiously to the news. Its President and Chief Legal Officer, Sabastian Niles, said the Commission’s action “further affirms that Microsoft’s anticompetitive practices with Teams have harmed competition” and called for a “binding, enforceable, and effective remedy.”

The latest developments come as Microsoft continues to face broader regulatory scrutiny in Europe and the UK, where it is also under investigation over alleged anti-competitive behavior in the cloud computing sector. A separate complaint filed by Google concerning Microsoft’s cloud practices could trigger another EU investigation in the future.

With input from the Financial Times, CNBC, and Reuters.