Microsoft has proposed significant changes to its Office 365 and Microsoft 365 offerings in an effort to resolve a European Union antitrust investigation. The software giant plans to sell these productivity suites without the Teams communication app at a reduced price, addressing concerns that bundling Teams with Office unfairly disadvantaged competitors.
The move comes in response to a 2020 complaint by Slack (now owned by Salesforce), which accused Microsoft of anti-competitive practices by tying Teams to its dominant Office suite.
And now, under the new proposal, the company will offer Office 365 and Microsoft 365 without Teams at a lower price point, while also selling Teams as a standalone product. Additionally, the Redmond-headquartered giant has committed to enhancing interoperability, allowing rival software to better integrate with its services. These commitments are intended to be legally binding for up to 7 years.
“The proposed commitments are appropriately focused on customers who purchase our suites in the EEA. What does that mean for our customers around the world? If the proposed commitments are accepted in a Commission decision, we have decided that we will, at the same time, align the options and pricing for our suites and Teams service globally, as we’ve done in the past,” the company said in a blog post.
Meanwhile, the European Commission is currently seeking feedback from competitors and customers to assess the effect of Microsoft’s proposed remedies. If accepted, these measures could conclude the ongoing antitrust case and help Microsoft avoid potential fines. However, failure to comply may result in penalties of up to 10% of Microsoft’s global revenue.
This is not the first time the tech titan has faced regulatory heat in Europe over bundling practices. In 2004, the European Commission fined Microsoft €497 million for tying Windows Media Player to the Windows operating system, arguing it harmed rival media software. At that time, the company was also forced to release a version of Windows without it, known as Windows XP N. Additionally, later in 2009, the firm faced similar action for bundling Internet Explorer with Windows, prompting the EU to mandate a ‘browser choice’ screen for users in Europe. Although in 2012, the company failed to implement this properly, resulting in an additional €561 million fine.
The proposal arrives in the midst of Microsoft recently laying off around 3% (~ 6000 employees) of its global workforce, affecting roles across various departments, including Azure, HoloLens, and customer support. The latest job cuts are part of broader cost-cutting and restructuring efforts as the company shifts focus toward AI and cloud services. Earlier, in January 2024, the company slashed 1,900 jobs across its Xbox, Bethesda, and Activision Blizzard teams, following its acquisition of the latter.
