Microsoft to Adjust Office-Teams Pricing to Sidestep EU Fine
In a bid to evade potential antitrust penalties from the European Union, Microsoft has set its sights on restructuring the pricing disparity between its Microsoft 365 suite bundled with Teams and the standalone Teams application. The tech giant found itself under the watchful eye of the European Commission, the regulatory body overseeing the EU’s 27 member nations, since July 2023 due to concerns regarding the bundling of Teams with its Office suite.
The Commission expressed apprehensions that this bundling might grant Microsoft an unfair advantage in distribution, hinting at potential anti-competitive implications. The initial alarm bells were rung by Salesforce-owned Slack back in July 2020, followed by a similar complaint lodged by Microsoft’s German rival Alfaview in July 2023. Despite Microsoft’s efforts to address these concerns preemptively, attempts hit roadblocks, prompting the launch of a formal antitrust probe by the Commission.
As a result of this scrutiny, Microsoft made the strategic move to unbundle Teams from its Office suite in Europe by adjusting pricing models. The Office 365 suite, now rebranded as Microsoft 365, saw a reduction of $2.17 (€2) per user per month or $26 (€24) per user per year in the Europe Economic Area and Switzerland. Concurrently, the standalone Teams application was offered to new enterprise customers in the region at $5.50 (€5) per user per month or $65 (€60) per year.
Despite these adjustments, the European Commission remains unconvinced and has solicited feedback from companies regarding Microsoft’s pricing differentials. The potential repercussions of a widened price gap between Office and Teams could inadvertently benefit competitors, enabling them to offer their collaboration tools at lower rates, thus threatening Microsoft’s market share.
This scenario serves as a stark reminder of Microsoft’s past antitrust woes, notably in the mid-2000s when the Commission mandated the unbundling of Media Player from Windows and imposed a hefty $2.3 billion in antitrust fines. Failure to address the current pricing concerns may lead Microsoft down a similar path, facing substantial fines of up to 10% of its global revenue.
In addition to the EU probe, Microsoft is also under the scrutiny of France’s antitrust watchdog regarding alleged manipulations in search results on its Bing search engine. The investigation focuses on whether Microsoft abused its dominant position in the search-engine syndication market, potentially resulting in penalties akin to those imposed on Google in the past.
As Microsoft navigates these regulatory challenges on multiple fronts, the tech industry watches closely to see how the company adapts its strategies to align with evolving antitrust regulations and maintain its competitive edge in the global market.