In a strategic concession to European competition authorities, Microsoft has offered to sell its flagship Office 365 and Microsoft 365 productivity suites without its Teams collaboration app at a lower price than the bundled versions that include Teams. The move, designed to iron out antitrust concerns and avoid a potential multibillion‑euro fine, reflects both the clout of EU regulators under new digital‑market rules and Microsoft’s desire to safeguard its dominant position in enterprise software.

The roots of Microsoft’s offer trace back to 2020, when Slack—now owned by Salesforce—filed a complaint with the European Commission, arguing that bundling Teams with Office 365 gave Microsoft an unfair edge over rival messaging and collaboration tools. At the time, Teams was quietly replacing Skype for Business in Office, appearing by default in every subscription and effectively forcing customers to adopt it. Although Microsoft had already begun to decouple Teams in early 2023, the European Commission deemed those initial adjustments insufficient.

Under mounting pressure from Brussels—where the Digital Markets Act and rigorous antitrust enforcement have emboldened regulators to crack down on leverage of dominant platforms—Microsoft crafted its latest offer. By allowing European customers to purchase Office suites without Teams at a discount of up to eight euros per user per month, Microsoft addresses the EU’s core concern: giving organizations genuine choice over whether to deploy Teams or instead opt for competing tools like Slack, Zoom or Google Chat.

Beyond simple unbundling, Microsoft’s proposal includes sweeping interoperability commitments. Rivals would gain access to specific Application Programming Interfaces (APIs) for Office Web Applications—Word, Excel and PowerPoint—enabling them to embed these familiar components within their own platforms. Competitors could also integrate their services directly into Microsoft’s productivity applications, surfacing alternatives to Teams within the Office interface. Crucially, enterprises would be able to extract their Teams messaging data in standardized formats, easing migration to other collaboration solutions.

By packaging these concessions into legally binding commitments—pricing relief for seven years and interoperability guarantees spanning a decade—Microsoft seeks to preempt a drawn‑out investigation and demonstrate good faith. The company has signaled its willingness to extend these changes globally, aligning Office and Teams pricing in all markets should the EU accept the offer. Doing so would simplify licensing structures and prevent regulatory fragmentation, though the immediate focus remains on satisfying Europe’s watchdog.

At stake for Microsoft is more than the avoidance of a fine. Under EU rules, the Commission can impose penalties of up to 10 percent of a company’s global turnover for anticompetitive conduct—a sum that, for Microsoft, could run into the tens of billions of euros. In addition, a protracted legal battle risks reputational damage and uncertainty among enterprise customers evaluating Microsoft’s cloud and productivity roadmap. By proactively reshaping its offerings, Microsoft hopes to preserve customer confidence and forestall any chilling effect on its broader cloud‑computing ambitions under Azure.

Microsoft’s decision also reflects the shifting balance of power in global tech regulation. In recent years, the European Union has emerged as the world’s most aggressive overseer of platform dominance, leveraging new rules like the Digital Markets Act (DMA) to curb gatekeeper behavior. The DMA, which came into force last year, obliges designated “gatekeepers” to keep core platform services separate and maintain interoperability with third‑party services. While Microsoft was not formally designated under the DMA’s initial list of gatekeepers, the spirit of the new regime informs Brussels’ approach to corporate remedies, prompting Microsoft to offer more robust unbundling and data portability measures than ever before.

Industry analysts view Microsoft’s pricing maneuver as both a defensive and offensive play. Defensively, it shores up Microsoft’s compliance posture and neutralizes a key attack vector for regulators. Offensively, it could accelerate customer adoption of Office in markets where price sensitivity and competition from open‑source suites like LibreOffice or cloud alternatives such as Google Workspace remain strong. By unambiguously separating Teams from Office, Microsoft removes a common objection among cost‑conscious buyers who have balked at adopting the full Microsoft ecosystem.

Nevertheless, the proposal will not quell all critics. Some of Microsoft’s rivals argue that even an eight‑euro discount fails to fully remedy the competitive disadvantage—particularly for large enterprises negotiating volume discounts, where eight euros per seat can translate to substantial sums. Others warn that the seven‑year window for discounted pricing may be too short, given the long‑term nature of enterprise licensing contracts. Salesforce, which oversees Slack, has pledged to scrutinize the details of Microsoft’s commitments to ensure they deliver real choice rather than nominal concessions.

Microsoft executives, for their part, emphasize that the package responds directly to the concerns laid out by the Commission. Nanna‑Louise Linde, Vice President for European Government Affairs, described the offer in a company blog post as “a clear, comprehensive solution that empowers European businesses with more flexibility and more control over their collaboration tools.” She underscored that enterprises could switch between Office suites with and without Teams without penalty and could add Teams as an optional, standalone service at any time.

The practical impact for European customers stands to be significant. Under Microsoft’s latest licensing schema, a mid‑sized company with 1,000 users could realize savings of up to €96,000 annually by selecting Office without Teams. Should that organization already employ a competing chat solution, the ability to import Teams data into the third‑party platform without manual migration steps promises further operational efficiencies. For smaller businesses or public‑sector entities working under tight budget constraints, the price carve‑out may be the decisive factor in renewing their Microsoft subscriptions rather than migrating to rival offerings.

In parallel, the interoperability commitments could catalyze a new wave of integration projects. Software vendors specializing in workflow automation, customer‑relationship management or vertical applications could embed Office Web Apps directly within their interfaces, presenting a unified user experience without forcing customers to toggle between multiple products. This, in turn, could spark innovation as startups leverage Microsoft’s productivity stack as a building block for specialized solutions—provided the EU deems the API access sufficiently open and nondiscriminatory.

Should Brussels accept Microsoft’s proposed remedies after the open feedback period, the case will likely become a landmark in EU competition history: a voluntary settlement that sets a template for how dominant software platforms can address bundling concerns without forcing complete structural separation. Similar to past agreements in the telecom sector—where mobile operators unbundled local loops to new entrants—Microsoft’s deal could illustrate how major digital ecosystems can maintain both scale efficiencies and fair-market dynamics.

However, if the Commission rejects the proposal or determines it insufficient to redress the competitive imbalance, Microsoft could face an ultimatum: implement deeper structural remedies, such as selling or spinning off the Teams division, or confront protracted litigation and possible fines. Given Microsoft’s track record of negotiating settlements in both the EU and U.S.—notably in the early 2000s antitrust saga—the company is likely to seek an amicable resolution that preserves its integrated product strategy while aligning with European market expectations.

In the background of these maneuvers lies a broader geopolitical narrative. The transatlantic tension over Big Tech regulation underscores divergent attitudes toward platform power, data sovereignty and national champions. By offering a global alignment of Office‑without‑Teams pricing, Microsoft sends a message that it values a coherent product framework over regional carve‑outs, hoping to minimize friction in other jurisdictions contemplating similar probes. Countries such as India, Brazil and South Korea are increasingly scrutinizing Big Tech bundling practices, and Microsoft’s EU settlement could serve both as a shield and a model for handling future investigations.

As the one‑month consultation window unfolds, Microsoft, its rivals, customer associations and SMEs will weigh in on the adequacy of the proposed price split and interoperability clauses. Their collective feedback will determine whether the European Commission can conclude the case swiftly—or whether the shadow of antitrust enforcement will linger, keeping Microsoft on a regulatory tightrope. In either scenario, Microsoft’s decision to unbundle and discount Office without Teams underscores a vital principle in the digital age: when integration crosses the line into exclusion, even the most entrenched platforms must adapt or face the full force of competition law.

(Adapted from Investing.com)