Report from Reuters
In Brief – Microsoft has reportedly offered to widen the price differential between its Office 365 product sold with its chat and video app Teams and its version of the software sold without the Teams as part of its ongoing negotiation to avoid an EU antitrust fine. Message and collaboration app Slack filed an antitrust complaint with the European Commission in 2020 accusing Microsoft of illegally tying Teams to Office and Windows and the Commission opened a formal investigation in mid-2023. That fall, Microsoft offered to provide versions of Office and Windows in Europe without Teams, as well as offer a stand-alone Teams product. In April 2024 they announced that they would roll those changes out globally, saying that the expansion “addresses feedback from the European Commission by providing multinational companies more flexibility when they want to standardize their purchasing across geographies.” Microsoft critics have argued throughout this process that the pricing differences between the different Microsoft services were not adequate. For example, the Office 365 suite without Teams was priced €2 less per month than the plan that included Teams, while the standalone price of Teams was €5 per month, and that Teams price is lower than that of top competitors. It is not clear whether Microsoft intends to offer a less expensive version of Office without Teams, raise the price of Office with Teams, or some combination of both.
Context – The regulatory mesh surrounding Microsoft is far more advanced in Europe that in the US. Microsoft is a “gatekeeper” under the Digital Markets Act and its Windows OS and LinkedIn are regulated as “core platform services.” However, the European Commission did not designate Office 365 as a core platform, so the law’s regulatory mandates do not apply and the Teams matter is consigned to traditional antitrust enforcement. On the other hand, the German Federal Cartel Office has wider authority to regulate all Microsoft services. Although the US FTC opened an investigation of Microsoft in the waning days of the Biden Administration, it is not clear how it will proceed in the new Administration.