How Microsoft avoided a billion-dollar EU fine over Teams

Microsoft has successfully avoided a potentially hefty European Union fine, which could have amounted to billions of dollars, by agreeing to unbundle its Teams platform from Office productivity software and offer reduced pricing options.

The European Commission says it accept Microsoft's commitments to address antitrust concerns, ending a years-long investigation that began with complaints from competitors.The case originated from a 2020 complaint filed by Salesforce-owned Slack, which accused Microsoft of illegally bundling Teams with Office 365 and Microsoft 365 to gain unfair competitive advantage. German competitor alfaview filed a similar complaint in 2023, intensifying regulatory scrutiny.

Seven-year commitment addresses bundling practices and boosts market competition

Under the binding agreement, Microsoft will make Office 365 and Microsoft 365 versions available without Teams at prices reduced by 1 to 8 euros. The company has also committed to widening the price gap between bundled and unbundled versions by 50% for certain business-focused suites.The commitments extend beyond pricing changes. Microsoft must provide interoperability between competing communication tools and its products, allow customers to export Teams messaging data to rivals, and enable long-term license holders to switch to unbundled versions.

Most commitments will remain in force for seven years, with interoperability and data portability requirements lasting 10 years. The remedies will be implemented globally, not just in Europe."Today's decision opens up competition in this crucial market and ensures businesses can freely choose the communication and collaboration product that best suits their needs," said Teresa Ribera, the EU's executive vice-president for competitive transition.The agreement represents a more conciliatory approach from Microsoft, which previously faced 2.2 billion euros in EU fines for similar bundling practices. EU antitrust penalties can reach up to 10% of a company's global annual revenue, making this settlement a significant financial relief for the tech giant.