Microsoft to rejig Office-Teams cost to avoid EU fine

Microsoft is reportedly working on increasing the price difference between its Microsoft 365 suite bundled with Teams and the standalone Teams application in a bid to avoid an antitrust fine from the EU.

The cloud services provider had been facing scrutiny from the European Commission — the executive arm of the European Union that governs regulations for its 27 member nations, since July 2023, over its bundling of Teams with its Office suite.

Back in 2023, the Commission had said that the bundling of Teams may grant Microsoft a distribution advantage and can be viewed as anti-competitive behavior.

The first complaint about bundling Teams was brought by Salesforce-owned Slack in July 2020. Later in July 2023, Microsoft’s German rival Alfaview also filed a similar complaint against the cloud services provider.  

While Microsoft had then wanted to address the Commission’s concerns before a formal probe began, attempts to remedy the situation reportedly hit a roadblock, prompting the Commission to launch an antitrust probe.

This led to Microsoft unbundling Teams from its Office suite in Europe in October 2023.

The cloud services provider had then said that it would sell its Office 365 suite (now renamed to Microsoft 365) in the Europe Economic Area and Switzerland for $2.17 (€2) less per user per month or $26 (€24) per user per year.

Microsoft also offered to sell the Teams application for new enterprise customers in the region as a standalone option for $5.50 (€5) per user per month or $65 (€60) per year.

European Commission is not convinced

However, it seems that the Commission is still not entirely convinced and satisfied with Microsoft’s price differential.

It has already asked some companies for feedback on the price differential by offering a one-week deadline, post which it will decide whether it wants to launch a formal market test, Reuters quoted sources as saying.

However, the widening of prices between Office and Teams could act as an advantage for rivals as they can offer their video conferencing or collaboration software for less, taking market share away from Microsoft.

For Microsoft, the current situation is a reminder of an investigation it faced from the Commission in the mid-2000s that ultimately ended with Microsoft having to unbundle its Media Player offering from its Windows suite and also pay $2.3 billion as EU antitrust fines.

If Microsoft is unable to remedy the current situation, it may be staring at another huge antitrust fine that can reach 10% of its entire global revenue.

Another probe from France’s antitrust watchdog

Over and above the EU probe, Microsoft is also facing another investigation from France’s antitrust watchdog over allegations of changing or degrading search results when smaller firms use its Bing search engine.

The watchdog is investigating whether Microsoft has abused its power or dominant position in the search-engine syndication market and has already spoken to rival operators about their agreements, Bloomberg cited sources as saying.

If watchdog officials unearth that Microsoft has been pushing bad search results onto smaller players, it could lead to a hefty fine for the company, the Bloomberg report said.

The French watchdog, which slapped a €250 million fine on Google last year, is also investigating chipmaker Nvidia and Apple for alleged abusive practices in the GPU market and app distribution on phones respectively.