Win-Win? (Premium)

As I observed in Nice Guy (Premium), Microsoft’s approach to antitrust in recent years is quite a bit different than it was when the U.S. Department of Justice (DOJ) was trying to break up the company and European Commission (EC) regulators were forcing the company to add a “browser ballot” to Windows. Thanks to now-president Brad Smith, Microsoft presents itself as a kinder, gentler Big Tech giant, one that is willing to compromise in all matters and work with, not lobby against, the rule of law.

It’s a good story. And it’s true to some degree, of course: Microsoft’s conciliatory behavior in the wake of the regulatory demands required to acquire Activision Blizzard, even the insane requirements demanded by the demented idiots at the UK Competition and Markets Authority (CMA), is an historic case study for us all. But it’s important to remember that Microsoft, for all its feel-good vibes, is still a publicly owned American corporation whose primary mission is to be as profitable and powerful as possible.

And Microsoft is quite good at that. Its market capitalization now stands at an incredible $2.44 trillion dollars, second only to Apple ($2.95 trillion). And it generates enough cash each quarter to invest tens of billions of dollars in building out an artificial intelligence (AI) infrastructure that can be rivaled by only a small number of companies, ensuring not only that its dominance of certain sub-markets will continue, but that it will continue to grow, getting even bigger than it is now.

Reconciling these different aspects of Microsoft is difficult. But today’s news that the software giant will unbundle Teams from Microsoft 365 is a great example of this dichotomy.  So let’s think about what this all means for a moment.

The key point, to me, is that this unbundling applies only to the European Economic Area (EEA) and Switzerland. Customers in other parts of the world are unimpacted, meaning that Microsoft will continue bundling Teams everywhere else.

Ideally, consumer- and competition-friendly laws and regulatory requirements in one jurisdiction would benefit customers in other locales, but that’s obviously not always (and probably not usually) the case. For example, when the EU passed a so-called “right to be forgotten” law aimed at Google Search, this nicety was not passed along to users elsewhere in the world and, as important, it doesn’t apply to EU citizens outside of the EU. Similarly, the EU’s General Data Protection Regulation (GDPR) required tech companies to make sometimes-onerous changes to how they store user data ... but only in the EEA.

But why wouldn’t Microsoft just make this unbundling change in the U.S. and elsewhere? What is the net impact of this change on the company?

One might argue that Teams is already established, as it has over 300 million active users, and so unbundling can’t possibly hurt Microsoft financially. But Microsoft is making many other conces...