Microsoft sidesteps hefty EU fine with Teams unbundling deal

In a significant shift, the European Union announced on Friday that it has accepted Microsoft's proposal to separate its Teams communication platform from its widely-used productivity software. This agreement effectively spares the tech giant from facing a substantial antitrust penalty that could have resulted from last year's allegations by the European Commission regarding anti-competitive practices. Teresa Ribera, the EU’s executive vice-president responsible for competitive transition, emphasized the importance of this decision, stating, "With today's announcement, we are formally binding Microsoft's commitments to cease its tying practices that hinder competition against Teams for the next seven years or longer." As part of the agreement, which was first disclosed in May, Microsoft will offer versions of its Office 365 and Microsoft 365 suites at a lower price that excludes Teams. Additionally, customers with existing long-term licenses will have the option to transition to these Teams-free suites. The company also committed to ensuring interoperability between its competitors’ tools and certain Microsoft products, along with facilitating the transfer of data from Teams to rival platforms. In response to ongoing competition concerns, Microsoft has also proposed further measures following a market test by the European Commission. These include increasing the price gap between Microsoft 365 and Office 365 suites with Teams and those without by 50%. Furthermore, Microsoft has agreed that its websites must clearly indicate the availability of Teams-free offers alongside those that include the service. Nanna-Louise Linde, Microsoft's vice president of European government affairs, expressed appreciation for the collaborative dialogue with the Commission that led to this resolution, stating, "We are now focused on implementing these new obligations swiftly and completely." The EU's investigation into Microsoft's practices began in July 2023, prompted by a complaint from Slack, a competitor owned by Salesforce, which purchased the chat service for $27.7 billion in 2021. Slack has not yet commented on the recent developments.