Microsoft Avoids EU Fine with Teams Unbundling Deal

• Microsoft will offer lower-priced Office suites without Teams and improve interoperability, resolving a long-running EU antitrust investigation.

Antitrust Complaint Leads to Major Concessions

Microsoft has reached an agreement with the European Commission to avoid a substantial antitrust fine by unbundling its Teams app from Office productivity suites. The case originated from a 2020 complaint by Slack Technologies, now owned by Salesforce, which alleged that bundling Teams with Office gave Microsoft an unfair competitive edge. A similar complaint was filed in 2023 by German video conferencing firm alfaview, adding pressure to the investigation. In response, Microsoft committed to widening the price gap between bundled and unbundled versions of Microsoft 365 and Office 365 by 50%.

The revised pricing will range from €1 to €8 per user and remain in effect for seven years. Microsoft also agreed to enhance interoperability between its services and competing platforms for a period of ten years. These changes will be implemented globally, not just within the European Union. Additionally, European customers will gain the ability to export Teams messaging data to rival services, improving data portability.

EU Welcomes Steps Toward Fairer Competition

EU antitrust chief Teresa Ribera stated that the decision opens up competition in the collaboration software market, allowing businesses to choose tools that best suit their needs. The Commission emphasized that Microsoft’s commitments address concerns about tying practices that may have hindered rivals from competing effectively. Nanna-Louise Linde, Microsoft’s Vice President for European Government Affairs, expressed appreciation for the dialogue with regulators and confirmed the company’s intent to implement the obligations fully. Alfaview CEO Niko Fostiropoulos welcomed the outcome, calling it a boost for Europe’s digital sovereignty and innovation potential.

Salesforce also responded positively, with President and Chief Legal Officer Sabastian Niles praising the Commission’s efforts to hold Microsoft accountable. He stressed the importance of rigorous monitoring to ensure compliance with the agreed terms. Microsoft’s conciliatory stance marks a shift from earlier years, when the company faced €2.2 billion in fines for bundling practices and other violations. The resolution avoids a potential penalty that could have reached up to 10% of Microsoft’s global annual revenue.

Broader Implications and Industry Reactions

The settlement arrives amid heightened scrutiny of U.S. tech firms by European regulators. Just days earlier, the Commission imposed a €2.95 billion fine on Alphabet’s Google over adtech practices, prompting criticism from U.S. President Donald Trump and threats of retaliatory tariffs. Microsoft’s agreement may serve as a model for resolving future disputes without litigation, balancing enforcement with negotiated outcomes. The Commission views this approach as particularly effective in digital markets, where product integration often challenges regulatory boundaries.

Microsoft’s Teams platform has grown rapidly since its launch, reaching over 320 million users and becoming deeply embedded in enterprise workflows. The company’s earlier attempt to offer Teams-free Office packages in Europe was deemed insufficient, leading to the more extensive commitments now in place. By allowing competitors to integrate with Microsoft’s ecosystem and enabling data migration, the deal aims to level the playing field. An independent trustee will monitor Microsoft’s compliance over the next decade.