Microsoft (MSFT, Financial) has announced plans to separate its Office 365 and Microsoft 365 software suites from the Teams communication app to address European regulatory concerns and avoid hefty antitrust fines. This move comes in response to the European Commission's demands to resolve issues related to bundling Teams with other productivity tools like Word and Outlook.
The antitrust issue began in 2020 when Slack, later acquired by Salesforce for $27.7 billion in 2021, filed a lawsuit against Microsoft, alleging market dominance abuse through bundling. Salesforce's leadership emphasized the need for binding corrective measures to ensure fair market practices.
Microsoft had previously attempted to address these concerns by offering a discounted version of Microsoft 365 without Teams in 2023. The latest commitments to the EU are seen as crucial for avoiding potential fines that could reach up to 10% of global revenue.
This adjustment highlights the increasing scrutiny global regulators are placing on tech giants' bundling practices. While this unbundling may impact Microsoft's ecosystem synergy, ensuring user choice under the EU's Digital Markets Act has become essential for multinational companies. The financial impact of this move on Microsoft's earnings remains undisclosed, but short-term fluctuations in enterprise subscription revenue are anticipated.
