Microsoft Corp MSFT has made a strategic decision to sell its Teams chat and video application separately from its Office suite worldwide.
In response to potential antitrust concerns, Microsoft’s move comes six months after a similar unbundling in Europe. The decision was prompted by an investigation from the European Commission into Microsoft’s bundling of Office and Teams, following a complaint from Slack, a workspace messaging app owned by Salesforce Inc CRM, as reported by Reuters.
Since its incorporation into Office 365 back in 2017, Teams has not only replaced Skype for Business but has also gained immense popularity, particularly for its video conferencing capabilities during the pandemic.
Critics argue that Microsoft’s previous bundling of Teams with Office provided the tech giant with an undue advantage in the market.
To address these concerns, Microsoft began offering the products separately in the European Economic Area (EEA) and Switzerland in 2023. A spokesperson emphasized that this global expansion provides multinational companies with enhanced purchasing flexibility across different regions, a move driven by feedback received from the European Commission.
Microsoft’s recent blog post delves into the introduction of new Microsoft 365 and Office 365 commercial suites without Teams for markets outside the EEA and Switzerland. Moreover, a standalone Teams option tailored for Enterprise customers will also be accessible.
Despite these changes, Microsoft remains under the scrutiny of the European Union regarding potential antitrust charges, with competitors criticizing the pricing and interoperability of their messaging services alongside Office Web Applications.
Having accrued €2.2 billion in EU antitrust fines for product bundling over the past decade, Microsoft faces a potential fine of up to 10% of its global annual turnover for antitrust violations. Reports suggest that Microsoft is poised to undergo its first formal EU antitrust investigation in 15 years. These developments come despite Microsoft’s attempts to assuage competition concerns by discontinuing the automatic installation of Teams post-Slack’s complaint in 2020.
With negotiations at a standstill concerning the scope of concessions and Teams’ pricing, the EU’s formal probe underscores its determination to combat anticompetitive behavior among significant tech firms amidst mounting political pressure and similar regulatory actions taken against other tech giants.
Microsoft is also actively 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 regarding Microsoft’s cloud computing licensing practices. The complaint, initiated in late 2022, focuses on contractual terms believed to detrimentally impact the European cloud computing sector. CISPE’s ongoing discussions with Microsoft, within the broader context of EU scrutiny on Microsoft’s practices, including its investment in OpenAI and challenges with Microsoft Teams, are aimed at resolving these licensing concerns by early 2024.
Over the last year, Microsoft’s stock has surged by over 46%. Investors looking to capitalize on this growth can consider exposure to the stock through SPDR Select Sector Fund – Technology XLK and Fidelity MSCI Information Technology Index ETF FTEC.
Price Action: MSFT shares were up by 0.98% to $424.86 in premarket trading at the last check on Monday.
Disclaimer: This content was partially created with the assistance of AI tools and was reviewed and published by Benzinga editors.
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