Updated April 2nd, 2024 at 13:14 IST

Teams go solo: How EU's antitrust led to Microsoft's cautionary move?

Amid the ongoing antitrust scrutiny, Microsoft has decided, particularly in Europe, to unbundle Teams from the rest of its Office 365 productivity suite.

Reported by: Anirudh Trivedi
Microsoft Teams | Image:Microsoft
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No more a ‘Teams’ player: The potential of effective video conferencing tools came to light when the world witnessed one of the biggest modern-day pandemics and corporates worldwide were forced to work from home. 

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Representative | Image credit: Unsplash

The COVID-19 pandemic opened the gates for remote working and tools like Microsoft’s Teams came at the forefront to connect people like never before. Be it education, live shows, corporate work, or just virtually hanging out with friends, Microsoft’s Teams overshadowed the majority of its competitors due to its accessibility, freemium model, and most of all because it came bundled with Microsoft’s Office 365, as a pre-installed collaboration software. 

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According to Microsoft’s official data, Teams users surged from 20 million in 2019 to 75 million in 2020, the year the pandemic began. The number almost doubled by 2o21 and by 2023, the total users of the platform crossed the mark of 320 million.

The popularity of Teams not only brought more clients to Microsoft but also strong antitrust criticism including the one from Slack, a team communication platform developed by the CRM major Salesforce. 

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Why did Slack file a complaint against Teams? 

In July 2020, Slack Technologies announced that it had filed a competition complaint against Microsoft before the European Commission alleging Microsoft of the illegal and anti-competitive practices of ‘abusing its market dominance’ to overtake its competition in emerging tech opportunities. 

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Representative | Image credit: Unsplash

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Slack claimed that Microsoft has illegally tied its Teams product into its market-dominant Office productivity suite, force installing it for millions, blocking its removal, and hiding the true cost to enterprise customers.

Jonathan Prince, Vice President of Communications and Policy at Slack explaining the complaint said that Microsoft is threatened by their market dominance from smaller players like Slack that are innovating to provide better services to the customers. “We want to be the 2 per cent of your software budget that makes the other 98 per cent more valuable; they want 100 per cent of your budget every time.” 

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Replying to the allegations by Slack, Microsoft claimed that it created Teams only to combine the ability to collaborate with the ability to connect via video because ‘that’s what people want’. Microsoft said, “We look forward to providing additional information to the European Commission and answering any questions they may have.”

EU’s antitrust campaign

EU regulators are continuously charging heavily on tech giants, impeding new fines and tightening the antitrust regulations further. EU’s antitrust watchdog fined Apple $2 billion for impeding competition in music streaming through App Store restrictions and not informing users about payment alternatives outside the App Store, prompted by a 2019 complaint from Spotify.

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Margrethe Vestager | Image credit: AP News 

Google has been fined $2.7 billion for abusing its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service. Intel was also fined $400 million for anti-competitive practice nearly two decades ago to block rivals. 

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Over the last ten years, Microsoft has not been an exception and has accumulated approximately $2.4 billion in fines from the EU for antitrust violations related to the bundling of multiple products. 

If proven guilty of further antitrust breaches, Microsoft could face a fine amounting to as high as 10 per cent of its annual global revenue, standing at over $217 billion for 2023. 

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Alert for caution 

Amid the ongoing antitrust scrutiny, Microsoft has decided, particularly in Europe, to unbundle Teams from the rest of its Office 365 productivity suit to reduce the chances of getting a hefty fine. 

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The move follows a six-month period during which Microsoft separated the two products in Europe, a measure that addresses concerns raised by competitors and regulatory authorities. 

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Mircosoft Office apps| Image credit: Unsplash

"To ensure clarity for our customers, we are extending the steps we took last year to unbundle Teams from M365 and O365 in the European Economic Area and Switzerland to customers globally," a Microsoft spokesperson said.

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"Doing so also addresses feedback from the European Commission by providing multinational companies more flexibility when they want to standardise their purchasing across geographies," added the spokesperson. 

Global unbundling efforts

The unbundling efforts of Teams from Microsoft extend beyond Europe and the company is planning to introduce new commercial Microsoft 365 and Office 365 suites that exclude Teams in regions outside the European Economic Area (EEA) and Switzerland, as well as offering a standalone Teams option for enterprise customers in those regions.

Effective April 1, customers have the option to maintain their current licensing arrangements or transition to the new offerings. Prices for Office without Teams for new commercial customers range from $7.75 to $54.75, while standalone Teams will cost $5.25. It's worth noting that prices may vary depending on location and currency.

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Charges do not end with unbundling Teams

Despite the fact that Microsoft has decided to unbundle Teams from the rest of the Microsoft 365 suite, Microsoft may still face antitrust charges from the EU, particularly concerning the level of fees and interoperability of competing messaging services with Office Web Applications. 

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Microsoft Office in Vancouver, BC, Canadá| Image credit: Unsplash

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According to the EU antitrust rules, the company, which has previously incurred significant fines for antitrust violations, could face penalties of up to 10 per cent of its global annual turnover if found guilty. 

If the company keep breaking the rules, those fines can rise to 20 per cent, and the European Commission can even break businesses up or block them from buying other companies.

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Published April 2nd, 2024 at 13:14 IST