Microsoft Decouples Teams from Office Globally in Response to Antitrust Concerns: Report

Microsoft Corp MSFT reportedly decided to sell its Teams chat and video application separately from its Office suite globally. 

The move, initiated six months after a similar unbundling in Europe, aims to address potential antitrust concerns. 

The separation in Europe was a response to an investigation by the European Commission into Microsoft’s bundling of Office and Teams, triggered by a complaint from Slack, a competing workspace messaging app owned by Salesforce Inc CRM, Reuters reports.

Since its addition to Office 365 in 2017, Teams replaced Skype for Business and gained popularity, especially for its video conferencing capabilities during the pandemic.

Critics argue that Microsoft’s practice of packaging Teams with Office provided the tech giant with an unfair market advantage, per the report. 

To counter these concerns, Microsoft began offering the products separately in the EU and Switzerland in 2023. 

A spokesperson highlighted that this global extension offers multinational companies greater purchasing flexibility across different regions, reflecting feedback from the European Commission.

Microsoft’s blog post detailed the introduction of new Microsoft 365 and Office 365 commercial suites without Teams for markets outside the EEA (European Economic Area) and Switzerland. Furthermore, a standalone Teams option for Enterprise customers will also be available. 

Despite these changes, Microsoft may still face EU antitrust charges, as competitors criticize the pricing and interoperability of their messaging services with Office Web Applications. 

Over the past decade, Microsoft has incurred €2.2 billion in EU antitrust fines for product bundling, facing a potential fine of up to 10% of its global annual turnover for antitrust violations.

Previous reports indicated that Microsoft will face its first formal EU antitrust investigation in 15 years. This move comes despite Microsoft’s efforts to alleviate competition worries by ceasing the automatic installation of Teams following Slack’s complaint in 2020. With stalled negotiations over the scope of concessions and Teams’ pricing, the EU’s formal probe underscores its commitment to tackling anticompetitive behavior among significant tech firms amidst increasing political pressure and similar actions against other tech giants. 

Microsoft is also engaging with the Cloud Infrastructure Services Providers in Europe (CISPE), including Amazon.Com Inc AMZN and 26 smaller providers, to address a complaint to the EU about Microsoft’s cloud computing licensing practices. The complaint, initiated in late 2022, focuses on contractual terms believed to harm the European cloud computing sector. CISPE’s discussions with Microsoft, against a backdrop of broader EU scrutiny of Microsoft’s practices, including its investment in OpenAI and issues with Microsoft Teams, aim to address these licensing concerns by early 2024.

The stock has gained over 46% in the last 12 months. Investors can gain exposure to the stock via SPDR Select Sector Fund – Technology XLK and Fidelity MSCI Information Technology Index ETF FTEC.

Price Action: MSFT shares traded higher by 0.98% at $424.86 premarket on the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo via Shutterstock