Microsoft is set to revise the pricing structure of its Office suite bundled with its communication platform, Teams. This move aims to address concerns raised by the European Commission (EC) and avoid potential antitrust penalties, Reuters reported, citing sources familiar with the matter.
The decision comes amid regulatory scrutiny following complaints from industry competitors. In 2020, Slack Technologies, a subsidiary of Salesforce, filed a complaint with the EC, alleging that Microsoft’s practice of bundling Teams with its Office suite restricted competition. In 2023, German video conferencing provider alfaview submitted a similar complaint, further intensifying regulatory focus on Microsoft’s business practices.
Teams was integrated into Office 365 in 2017 at no additional cost, replacing Skype for Business. The platform experienced significant growth during the COVID-19 pandemic, driven by increased demand for remote communication tools. However, competitors argued that bundling Teams with Office created an imbalance in the market, limiting the ability of rival products to compete effectively.
In response to these concerns, Microsoft unbundled Teams from Office in 2023, offering a version of Office without Teams priced €2 lower than the bundled version, while selling Teams as a standalone product for €5 per month. Despite these changes, the EC continued to examine whether Microsoft’s adjustments sufficiently addressed competition issues.
Sources, as per the news agency, indicate that Microsoft has now proposed widening the price gap between Office with Teams and Office without the app to create a more competitive environment. Additionally, Redmond has suggested new interoperability measures aimed at simplifying the integration of rival platforms with Microsoft’s products.
The EC has sought feedback from a range of companies regarding Microsoft’s proposals, with responses expected this week. This input will help determine whether the Commission will proceed with a formal market test to evaluate the effectiveness of Microsoft’s proposed remedies.
Microsoft has previously faced antitrust penalties from EU regulators, having paid €2.2bn in fines over the past two decades related to product bundling violations. Under EU competition law, companies found in breach of antitrust rules can face fines of up to 10% of their global annual revenue.
Microsoft under additional antitrust scrutiny in France over Bing technology
In a separate regulatory development, Microsoft is facing an antitrust investigation in France concerning its Bing search technology. The French competition authority, Autorité de la Concurrence, is examining whether Microsoft has degraded the quality of search results provided to smaller companies that pay to integrate Bing’s technology into their own search engine products.
A Microsoft spokesperson confirmed the company’s cooperation with the French investigation to Reuters. According to Bloomberg, which first reported the investigation, Microsoft holds a modest position in the general search engine market but remains a leading player in the search-engine syndication sector, where smaller companies license its technology.
The investigation could result in formal charges and financial penalties if the French competition authority identifies violations of antitrust regulations.
Read more: CMA considers investigating AWS and Microsoft’s UK cloud activities following market investigation
