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Microsoft may stop bundling Teams with Office amid antitrust probe threat

First came Slack then others joined the scrum to tackle the Beast of Redmond

Microsoft is offering to stop bundling web conferencing and messaging app Teams with Office software to stave off the threat of a full-blown antitrust investigation by European Union regulators.

Industry figures close to the situation told The Register this is a positive first step toward leveling the playing field for businesses in Europe that claim they are locked out by Microsoft's alleged anti-competitive behavior. Slack was one of the companies to make a complaint in 2020 before it was bought by Salesforce.

According to the Financial Times, Microsoft may unbundle Teams from biz versions of the online productivity suites that come with Microsoft 365 or Office 365, though sources said talks are ongoing and an agreement is not certain.

EU Commission executive vice president Margrethe Vestager

Only EU can help us, pleads Slack as it slings competition complaint against Microsoft Teams


We asked Microsoft to comment on the move, which looks like an olive branch to appease EU officials that have examined rivals' complaints of unfair cloud software licensing or bundles.

"We are mindful of our responsibilities in the EU as a major technology company," a Microsoft spokesperson told us. "We continue to engage cooperatively with the Commission in its investigation and are open to pragmatic solutions that address its concerns and serve customers well."

Microsoft told us it had no further comment.

Back in 2020, Slack general counsel David Schellhase claimed Microsoft "illegally" tied Teams "into its market-dominant Office" suite to "force installing it for millions, blocking its removal, and hiding the true cost to enterprise customers."

We asked Slack to comment today.

Sources told us that last month talk in the industry indicated the European Commission would proceed with an official probe of Slack's claims. "This might have stimulated Microsoft into thinking they need to fix this ahead of time," said one who spoke on the condition of anonymity.

The Coalition of Fair Software Licensing said of Microsoft's possible concession that it leaves customers with "more questions than answers."

"All eyes are on Microsoft to see what the company will do to protect customer choice as it decouples these two ubiquitous software offerings. We have seen Microsoft use restrictive software licensing tactics in the cloud to increase customer dependence on its products and limit choice. Unbundling two products is not enough to address the valid concerns of customers and regulators about its restrictive software licensing practices."

Germany-based Nextcloud, which among other things is a provider of on-premises collaboration platforms, filed two complaints with the European Commission in 2021 over Microsoft's bundling of online services, namely OneDrive, with the Windows operating system.

Last month it emerged that Germany's competition watchdog was investigating Microsoft due to the size of the corporation's portfolio that spans OSes, applications, cloud services, games and social media.

There are "good reasons to examine whether Microsoft is of paramount significance for competition across markets. Such a finding would allow us to take action at an early stage and prohibit possible anticompetitive practices," said Bundeskartellamt president Andreas Mundt at the time.

Today, Frank Karlitschek, Nextcloud CEO, told us the various complaints may have forced Microsoft to respond. "Overall we think this is a step in the right direction. But a lot more is needed. For example the bundling of OneDrive into Windows and Office on mobile; the bundling and shipping of Teams in Windows 11; and the automatic login into OneDrive, Teams and other Microsoft 365 apps together with the Windows login.

"This is a good step in the right direction but 100 more steps are needed."

Francisco Mingorance, secretary general of cloud provider non-profit CISPE, said: "In an effort to head off formal investigations and scrutiny of its unfair software licensing practices, Microsoft is offering a series of unilateral, voluntary deals.

"Its willingness to unbundle Teams should be quickly extended to give customers the ability to run Windows productivity software, including Office365, on whichever cloud infrastructure they choose."

He added: "CISPE will consider any deals that prevent lock-in and restore fair choice to the market, but cautions that agreements must be transparent, auditable and enforceable.

"The devil is in the detail, and without formal investigations and monitorable remedies, it will be impossible to verify that these unilateral moves do indeed restore fair competition and choice for European customers by ending practices which are damaging Europe's cloud sector every day."

Microsoft previously also attracted the attention of European regulators following complaints over its software licensing practices in the cloud, but last month it reached a settlement with OVHcloud, Aruba S.p.a, and the Danish Cloud Community. It cut deals with those three companies so they would withdraw their complaints.

This, according to one source connected to the cloud market, is part of the problem. "All deals seem to be secret so no one can know what the deal is, when it will happen or who it will affect. That is an alarm bell because all three complaints were over issues that had veracity and sector wide implications, yet without proper scrutiny who can know if the issues are solved."

It's almost as if Microsoft learned nothing – or maybe everything – from its previous antitrust court battles. ®

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