After years of regulatory scrutiny in Europe, Microsoft appears to be nearing a resolution to its antitrust clash with the European Union over the bundling of its Teams collaboration software with Office productivity suites. The tech giant has proposed several concessions that could end the dispute without facing additional hefty fines, marking a potential turning point in Microsoft's complicated regulatory history in Europe.
Microsoft's Proposal to European Regulators
Microsoft announced on Friday that following constructive, good-faith discussions with the European Commission, it has offered to unbundle its Teams workplace collaboration app from its productivity suites like Office 365. This would allow customers to purchase Microsoft's productivity software without being required to include Teams, providing more flexibility for businesses that may prefer alternative collaboration platforms. Importantly, Microsoft stated that this option would apply to customers globally, not just within the European Union.
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| The digital workspace interface of Microsoft Teams, highlighting its role in workplace collaboration amidst regulatory changes |
Addressing Competitive Concerns
The dispute began in 2020 when Slack filed a complaint accusing Microsoft of abusing its dominant market position by integrating Teams with its widely-used Office suite. Slack, which was later acquired by Salesforce for over $27 billion in 2021, alleged that Microsoft's bundling strategy stifled competition in the workplace collaboration space. Microsoft's latest proposal aims to directly address these concerns by offering standalone versions of Office 365 and Microsoft 365 without Teams at reduced prices.
Enhanced Interoperability Commitments
Beyond unbundling Teams, Microsoft has emphasized commitments to interoperability—allowing users to move data between Teams and competing collaboration tools. Nanna-Louise Linde, Microsoft's vice-president of European government affairs, stated that the company believes these proposals represent a clear and complete resolution to the concerns raised by our competitors and will provide European customers with more choices. This focus on data portability and cross-platform communication appears designed to address core competitive concerns about ecosystem lock-in.
Microsoft's Regulatory History in Europe
This conciliatory approach comes after an expensive history of regulatory clashes with the EU. Microsoft's European operations have been under scrutiny since 1993, resulting in significant penalties including a €497 million fine in 2004 (approximately $700 million at the time) and an €899 million fine in 2008 (approximately $1.36 billion) for non-compliance with earlier rulings. By proactively addressing the Teams bundling issue, Microsoft appears to be taking steps to avoid another costly penalty.
Potential Resolution Without Fines
According to reports, the European Commission is likely to accept Microsoft's proposal, which would close the investigation without imposing additional fines. This would mark a significant win for Microsoft in establishing a more cooperative relationship with EU regulators. The company has been working toward this resolution for several years, initially proposing to remove Teams from its productivity suites in 2023 and offering additional commitments earlier this year, including larger price differences between bundles sold with or without Teams.
Salesforce's Response
Despite the apparent progress toward resolution between Microsoft and EU regulators, Salesforce, which now owns Slack, has indicated it isn't ready to consider the matter closed. Salesforce president Sebastian Niles stated that the EU announcement confirmed Microsoft's antitrust violations, and the company's legal team is still carefully reviewing Microsoft's proposal to the European Commission.
Broader Regulatory Landscape
Microsoft's approach to resolving the Teams antitrust issue comes as EU regulators have increasingly turned their attention to other tech giants. Apple, Google, and Intel have all faced substantial antitrust fines in Europe in recent years. Sources familiar with the matter suggest that regulators are shifting focus toward new antitrust targets, potentially giving Microsoft an opportunity to resolve its ongoing case and improve its regulatory standing in the region.