EU Publishes New Microsoft Proposal to Address Microsoft 365/Teams Bundling Concerns

In 2023, Microsoft proposed unbundling Teams from Microsoft 365 to address EU antitrust concerns, but it did so only in Europe. This didn’t satisfy the European Commission, however, so Microsoft in early 2024 decoupled the two products worldwide. And then the EU charged the software giant with violating its antitrust rules anyway.

Since then, Microsoft and EC regulators have worked in private to resolve this issue. And today, the Commission published the commits Microsoft has made to address its concerns. It’s looking for feedback from stakeholders and will apparently approve the Microsoft proposal if there are no legitimate complaints.

Microsoft has proposed to:

• Make available versions of the Microsoft 365/Office 365 suites without Teams at a reduced price
• Allow customers to switch to suites without Teams, including in the framework of existing contracts
• Offer Teams’ competitors increased interoperability with other Microsoft products
• Allow customers to move their data out of Teams to facilitate the use of competing solutions.

It’s not clear how different this is from the proposals it made last year. I assume it has further lowered the prices of the Teams-less versions of Microsoft 365. And that the interoperability commitment is perhaps new as well.

But this case has all kinds of issues.

On the one hand, bundling a new product or service with a dominant product or service to gain the upper hand in a new market is a classic anticompetitive strategy, and it does violate Article 102 of the Treaty on the Functioning of the European Union (TFEU). This behavior was also the basis for Microsoft’s historic antitrust issues in the United States in the late 1990s and with the EU in the early 2000.

But what Microsoft didn’t do is perhaps of more interest.

Microsoft never tried to acquire the up-and-comer it was concerned with–Slack, in this case–to eliminate the competition. Instead, it competed the old-fashioned way. It built Teams from scratch using technologies it had built and then honed over decades, since well before Slack even existed. And then it bundled this app with Microsoft 365, the successor to the classic PC-based Office suite. As it has done with major new productivity apps since the early 1990s. It is not clear that this harmed Slack or Microsoft’s customers, as the EU alleged.

Microsoft also never behaved belligerently towards the EU in the face of this charge, and it has only tried to work with regulators to address their concerns. Contrast this to the bitchy and malicious non-compliance the Commission has experienced with Apple. It’s beyond stark.

For its part, Microsoft confirmed that it engaged in “constructive, good-faith discussions with the European Commission over several months.”

“We value the opportunity to engage constructively with the European Commission and take seriously any concerns they raise regarding our business practices,” Microsoft vice president of European Government Affairs Nanna-Louise Linde writes. “Throughout our 50-year history, we have learned the importance of listening, engaging, and responding to such concerns.”

Further, Microsoft pledges to apply these commitments worldwide if they are approved by the EU, giving its customers globally consistent licensing. And it will continue making all versions of its frontline suites without Teams available globally. In other words, where Apple continues to harm competitors and partners worldwide by applying forced changes only where required, Microsoft is doing the right thing.

So we’ll see what happens. You can expect Slack and its parent firm, Salesforce, to continue complaining. But it’s unclear what more Microsoft could do to address these concerns. Indeed, it’s reasonable for them to do less.