Deal: EU and Microsoft agree on new requirements for Teams video software

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After years of wrangling, the EU Commission and Microsoft have agreed on new, legally binding obligations relating to the Office package. These are intended to address the EU's concerns regarding the integration of Microsoft Teams in Office 365 and Microsoft 365. Following submissions from competitors, the Commission had previously complained that the US company was abusing its dominant market position in business applications by linking Teams to its Office packages by default. This had restricted competition in the market for communication and collaboration software and put competitors at a disadvantage.

To address the Commission's concerns, Microsoft has committed to several key steps. These include, above all, the unbundling of software packages. With immediate effect, Microsoft must offer versions of its cloud-based Office packages without the video conferencing solution in the European Economic Area (EEA) at a "significantly lower price". The free trade zone includes the EU member states Iceland, Liechtenstein and Norway.

As a first step, Microsoft launched independent Teams licenses on the market two years ago. Small and medium-sized companies pay around 45 euros net per user per year. However, the conferencing software is still included with Office 365 and Microsoft 365. Anyone who does not want Teams has still paid the full price. It is not yet known how much the packages without Teams will cost.

In addition, it will now be easier for customers with existing long-term licenses to switch to one of these unbundled versions and enable the use of such packages in data centers worldwide. To reinforce this commitment, Microsoft has subsequently increased the price difference between the packages with and without Teams by 50 percent following additional negotiations after its initial offer. This also applies to offers aimed at business customers.

Better interaction with competitor solutions

The software company has also promised to repeatedly give customers in the EEA the opportunity to switch to packages without Teams. It wants to emphasize that Microsoft websites advertising an offer for software with Teams will also display a corresponding offer for a corresponding package without the video conferencing system.

It is also about improving interoperability: Microsoft must ensure that competing communication and collaboration services such as Slack, Zoom, Cisco Webex or OpenTalk can work seamlessly with Microsoft products such as Word, Excel and Outlook. Customers must be able to easily export their data from Teams and use it in competitor applications. The company also wants to publish information about interoperability and data portability on all its relevant developer websites.

Microsoft's commitments are valid for seven years. There is an exception for the commitments on interoperability with external solutions and data transfers, which run for ten years. Compliance is to be monitored by a trustee who can also mediate disputes between Microsoft and third parties. If third party concerns persist, the dispute in question will be dealt with in an "expedited arbitration procedure", according to the Commission. The trustee will also report regularly to the Commission.

Commitments are legally binding

On this basis, the Commission has concluded that Microsoft's final commitments "adequately address its competition concerns in relation to the conduct" of the tech giant. The commitments are therefore legally binding. With the agreement, Microsoft avoided a potentially lengthy court battle that could have led to a hefty fine. If the company fails to comply with the conditions, it faces comparatively high penalties of up to 10 percent of its annual global turnover.

These measures are intended to make the market for providers of communication and collaboration applications in Europe fairer and more open, which will ultimately strengthen competition and benefit customers.

Background to the investigation

The Brussels competition authorities launched their investigation in July 2023 following complaints from companies such as Slack Technologies and Alfaview. The Commission found that Microsoft gained an unfair advantage by bundling Teams, as Teams was able to gain a strong market share more easily through automatic integration. This had restricted competition and put other providers disadvantaged. In mid-May, the Commission initiated a market test of Microsoft's commitment offers, which ran for one month. Following this, Slack and Alfaview withdrew their submissions.

All over Europe and the world, people rely on tools such as video conferencing and chat for collaboration, emphasized Teresa Ribera, Commission Vice-President for Competitive Change. This has been particularly true since the coronavirus pandemic. With the decision, the EU is bringing more competition "to this important market: companies should be able to choose the communication and collaboration tool that best suits their needs."

Nanna-Louise Linde, Vice President of European Government Affairs at Microsoft, said: "We appreciate the dialog with the Commission that led to this agreement." She pledged a "swift and full implementation of these new commitments".

(vbr)