Microsoft Proposes Pricing Changes for Office and Teams to Avoid EU Antitrust Penalty

U.S. tech giant Microsoft (NASDAQ: MSFT) has decided to adjust the pricing structure for its Office software and the chat and video conferencing app, Teams. This move aims to avert potential antitrust fines from the European Commission.

This decision comes five years after Slack, a company owned by Salesforce (NYSE: CRM), filed a complaint with the European Commission, accusing Microsoft of anti-competitive practices by bundling Teams with Office. In 2023, the German competitor alfaview lodged a similar complaint:

1. In 2018, Slack expressed concerns to the European Commission, criticizing Microsoft’s integration of Teams with Office as anti-competitive.
2.  In 2023, alfaview followed with a similar complaint, alleging that Microsoft’s practices were infringing on competitive rights and opportunities.

Separation of Office and Teams Products

In response to the accusations and intending to avoid EU penalties, Microsoft has decided to alter its software pricing structure.

• Office without Teams: Starting in 2023, Microsoft began offering Office without Teams integration for 2 euros less than the version with the video conferencing app.
• Teams Sold Separately: The Teams app is now sold separately for 5 euros per month.

Market Impact and Competition

By offering separate pricing for Office and Teams, Microsoft is seeking to foster a more transparent and competitive environment in the market for chat and video conferencing software. This move could lead to several outcomes:

• Enhanced Competitiveness. Increasing the cost of Office with Teams could benefit competitors like Slack and alfaview, allowing them to price their products more competitively.
• User Distribution. The higher price for Office with Teams might encourage some users to switch to alternative solutions, leading to a more diversified market.

Microsoft’s adjustment of pricing policy for Office and Teams illustrates the company’s response to antitrust complaints and its commitment to maintaining healthy competition in the market. This strategic move may help create more favorable conditions for all players in the chat and video conferencing software space.