Microsoft to Unbundle Office 365 from Teams, Cutting Prices to Avoid EU Antitrust Penalty
Key Points
- Microsoft will sell Office 365 without Teams at a substantially lower price.
- The move resolves a multi‑year EU antitrust dispute triggered by a Slack complaint.
- Customers can switch to unbundled licenses and transfer their data out of Teams.
- Price cuts could reduce the cost gap between bundled and unbundled suites by about 50%.
- Competitors like Slack, Google Meet, and Zoom will gain greater interoperability with Office apps.
- The agreement shields Microsoft from a potential EU fine for at least seven years.
- Teams continues to dominate with a user base five times larger than Slack’s and $8 billion in revenue.
Microsoft has agreed to sell Office 365 suites without the Teams collaboration tool at a substantially lower price, ending a long‑standing European Union antitrust dispute. The settlement follows a complaint that Microsoft illegally tied Teams to its dominant Office suite, limiting competition. Under the deal, customers can switch to licenses that exclude Teams, move their data elsewhere, and benefit from price cuts that could halve the cost difference between bundled and unbundled suites. Competitors such as Slack, Google Meet and Zoom will gain greater interoperability, while Microsoft avoids a potential EU fine.
EU Antitrust Dispute Over Bundling
For more than five years, the European Union has investigated Microsoft’s practice of bundling its Teams communication platform with Office 365 and Microsoft 365 subscriptions. The complaint, originally filed by Slack, alleged that Microsoft was abusing its market dominance by forcing customers to purchase Teams alongside the Office productivity suite, an action described as an illegal and anti‑competitive tying of products.
Agreement to Unbundle and Reduce Prices
In response, Microsoft has agreed to offer Office 365 suites without Teams at a significantly lower price than the bundled versions. The price reduction is expected to cut the difference between the two options by roughly 50 percent. Customers with long‑term licenses will be able to switch to licenses that do not include Teams, and they will have the right to move their data out of Teams if they choose a different communications platform.
Benefits for Customers and Competitors
The unbundling move gives businesses greater choice and flexibility. It also opens the door for Teams competitors—such as Slack, Google Meet, and Zoom—to interoperate more easily with core Office applications like Word and Excel. Industry observers note that while the price cut may not dramatically shift market share, it does create a more level playing field for rival collaboration tools.
Market Impact and Outlook
Microsoft’s agreement is designed to keep the company out of trouble with EU regulators for at least seven years, avoiding a potential fine. Analysts point out that Teams already enjoys a user base five times larger than Slack’s and generates about $8 billion in revenue, roughly double Slack’s projected earnings. Nonetheless, the settlement is seen as a clear signal that the EU is willing to enforce competition rules in the software market.