Microsoft has proposed increasing the price gap between its Office suite bundled with Teams and the version without the collaboration app in an effort to avoid potential European Union (EU) antitrust fines, sources familiar with the matter revealed.
This move follows ongoing scrutiny from the European Commission over Microsoft’s product bundling practices.
Background of the Investigation
The EU’s investigation stems from a 2020 complaint by Slack, a Salesforce-owned messaging platform, which alleged that Microsoft’s bundling of Teams with Office gave the U.S. tech giant an unfair competitive advantage. A similar complaint was filed in 2023 by German competitor alfaview. Teams, which was integrated into Office 365 in 2017 at no additional cost, eventually replaced Skype for Business and surged in popularity, especially during the pandemic.
The European Commission initiated an antitrust probe in mid-2023, focusing on whether Microsoft’s practices stifled competition by making it difficult for rival software providers to compete effectively. In response, Microsoft unbundled Teams from Office in August 2023, offering Office without Teams for €2 less than the bundled version. Additionally, a standalone Teams subscription was priced at €5 per month. However, regulators indicated that these measures might not be sufficient to address competition concerns.
Proposed Adjustments and Industry Response
Microsoft’s latest proposal, which includes a more substantial price difference between Office with and without Teams, aims to allow competitors to offer more attractive alternatives. The company has also pledged improved interoperability terms, making it easier for rival collaboration tools to integrate with Office products.
While Microsoft’s concessions could persuade regulators to drop the case without issuing a fine or formal charges, industry sources suggest that further adjustments may be required. The European Commission has sought feedback from businesses impacted by Microsoft’s bundling strategy before determining its next steps.
If Microsoft fails to sufficiently address regulatory concerns, the Commission could move forward with formal charges by autumn 2025. Under EU law, Microsoft faces potential fines of up to 10% of its global annual revenue, which could amount to billions of euros.
Additional Regulatory Challenges
Beyond the Office-Teams investigation, Microsoft is also under scrutiny from the French antitrust authority regarding the use of Bing search technology. Regulators are assessing whether Microsoft is limiting the quality of search results when smaller search engine providers pay to access Bing’s data. While Microsoft has stated its full cooperation with the investigation, the case could lead to formal charges and financial penalties.
Microsoft has a history of regulatory clashes in Europe, having accumulated €2.2 billion in EU antitrust fines over the past two decades for bundling practices related to its Windows operating system. The current investigation adds to the growing regulatory pressure on the tech giant as European authorities intensify their focus on competition enforcement in the digital sector.
Outlook and Potential Impact
If Microsoft’s latest proposal is accepted, it could free up resources within the European Commission to focus on ongoing antitrust cases against other major tech firms, including Apple and Google. However, should the Commission find Microsoft’s adjustments insufficient, the company could face prolonged legal battles and substantial financial penalties.
For now, Microsoft awaits the European Commission’s decision, which could shape the future of software competition in the EU. As regulators deliberate, rivals and consumers alike will be closely monitoring how these policy shifts impact market dynamics and pricing within the productivity software landscape.
