Microsoft unbundles Teams from Office 365 to avoid EU fine
Microsoft has managed to avoid a hefty fine or other sanctions after the European Commission accepted the company’s proposal for unbundling Teams from Office 365 and Microsoft 365.
A complaint from Slack a few years ago started the European legal wheels turning as Microsoft was accused of anti-competitive behavior once again. The European Commission agreed that the company had “granti[ed] Teams an undue competitive advantage in terms of distribution”, but now accepts Microsoft’s unbundling proposal.
Microsoft initially made a proposal to offer a version of Office 365 and Microsoft 365 that did not include Team, but was later forced to make concessions by introducing pricing changes as well.
The European Commission announced its latest decision by saying:
The European Commission has accepted commitments from Microsoft to address EU competition concerns relating to its popular team collaboration platform Teams. These commitments will henceforth be legally binding under EU antitrust rules.
Going into a little more detail about the terms that made it possible for Microsoft to avoid a fine, the Commission explains:
Under the commitments, Microsoft will (i) make available versions of these suites without Teams and at a reduced price; (ii) allow customers with long-term licenses to switch to suites without Teams; (iii) provide interoperability for key functionalities between communication and collaboration tools that compete with Teams and certain Microsoft products; and (iv) allow customers to move their data out of Teams to facilitate the use of competing solutions.
By helping to restore fair competition, these commitments will open up the market for other providers of communication and collaboration tools in Europe.
Microsoft’s initial proposal had been:
- To offer customers purchasing in the EEA versions of its Office 365 and Microsoft 365 suites without Teams and do so at an appreciably lower price than the one for the corresponding suites that include Teams. In addition, Microsoft committed not to offer discount rates on Teams or on suites with Teams higher than those offered on suites without Teams.
- To give customers purchasing in the EEA recurrent opportunities to switch to suites without Teams and allow for such suites to be deployed in datacentres worldwide.
- To allow Teams' competitors and certain third parties (i) effective interoperability with certain Microsoft products and services for specific functionalities, as well as (ii) to embed the Office Web Applications (Word, Excel, and PowerPoint) in their own products, and to (iii) prominently integrate their products in Microsoft's core productivity applications.
- To allow customers in the EEA to extract their Teams messaging data for use in competing solutions.
But as these left the Commission unimpressed, further changes were introduced:
- increase the price difference between some Microsoft 365 and Office 365 suites without Teams and the corresponding suites with Teams, including the suites targeted at businesses, by 50%.
- clarify that relevant Microsoft websites that advertise any software offer that includes a suite with Teams should also display the corresponding offer without Teams.
- publish information on interoperability and data portability on all its relevant developer-facing websites.
Microsoft will need to stick to these commitments for seven years to keep the Commission happy. However, the commitments related to interoperability and data portability will remain in force for ten years.
Responding to the news, Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition, said:
Organisations big and small across Europe and around the world rely heavily on videoconferencing, chat and collaboration tools, especially since the coronavirus pandemic. With today’s decision, we make binding for seven years or more Microsoft’s commitments to put an end to its tying practices that may be preventing rivals from effectively competing with Teams. Today’s decision therefore opens up competition in this crucial market, and ensures that businesses can freely choose the communication and collaboration product that best suits their needs.
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