Licensing Changes to address European Competition Concerns

Microsoft under investigation

European authorities are currently conducting an investigation into Microsoft’s bundling of its Teams software with Microsoft 365, examining potential anticompetitive practices. The European Commission’s inquiry, prompted by a formal complaint filed by Microsoft’s competitor, Slack (now owned by Salesforce), in 2020, revolves around allegations of Microsoft unlawfully circumventing competition.

Microsoft’s practice of including Teams alongside its widely-used productivity suite, which includes applications like Word and Outlook, has raised concerns that it might be inhibiting customers from considering alternative collaboration tools. Additionally, antitrust officials are focusing on issues related to interoperability between Microsoft’s software and third-party products.

In a statement, the European Commission expressed its concerns, stating that these practices could amount to anti-competitive tying or bundling, potentially impeding suppliers of other communication and collaboration tools from entering the market.

In a recent development, the European Commission initiated a formal investigation into Microsoft’s bundling of Microsoft Teams with its Microsoft 365 and Office 365 suites for business customers. Microsoft’s response to this investigation includes proactive changes aimed at addressing the Commission’s concerns, even as the investigation unfolds. These changes will impact Microsoft 365 and Office 365 customers in the European Economic Area (EEA) and Switzerland and are designed to address two key concerns raised by the Commission.

Microsoft has long believed that modern work solutions should incorporate modern communication and collaboration tools. Over the years, these tools have been integrated into Microsoft’s business suites, starting with Office Communicator in 2007 and evolving through Lync, Skype for Business Online into Microsoft Teams.

According to Microsoft, they recognize their role as a significant technology provider. Microsoft also acknowledges the importance of maintaining a competitive environment. Extensive discussions with the European Commission have provided clarity on several concerns, prompting Microsoft to take meaningful steps to address these issues.

Unbundling Teams

Starting on October 1, 2023, Microsoft will unbundle Microsoft Teams from its Microsoft 365 and Office 365 suites in the EEA and Switzerland. These offerings will be available without Teams at a lower price, making it possible for customers to choose a business suite without Teams included, thus addressing one of the Commission’s concerns. Existing enterprise customers with a suite that includes Teams can decide whether to stay with their current suite or transition to a suite without Teams. Additionally, small businesses and frontline workers will have the option to choose a suite without Teams at a reduced price.

Enhancing Interoperability

Microsoft already offers extensive interoperability with its Microsoft 365 and Office 365 apps and services, enabling third-party companies like Zoom and Salesforce to create integrated experiences. In response to feedback received during the investigation, Microsoft plans to enhance its support for application developers and provide more resources to facilitate interoperability with Microsoft 365 and Office 365, particularly with Teams. This should address the second concern.

Licensing from October 2023

Enterprise customers

The licensing for Enterprise customers will change significantly. Microsoft will stop offering its current Enterprise suites that include Microsoft Teams to new subscribers in the EEA and Switzerland, starting on October 1, 2023. This affects the following suites: Office 365 E1, Office 365 E3, Office 365 E5, Microsoft 365 E3, and Microsoft 365 E5.

Existing customers who are already subscribed to these suites have a few options. They can continue using, renewing, and adding seats to their current plans as they normally would. Alternatively, they can choose to transition to the new lineup when their contract anniversary or renewal comes up. Microsoft is introducing a new commercial lineup. New subscribers in the EEA and Switzerland who want Microsoft Teams will need to purchase two separate SKUs: an EEA-specific Microsoft 365 or Office 365 suite and Microsoft Teams EEA.

Frontline suites

Customers in the EEA and Switzerland will be able to choose between the existing Microsoft 365 F1, Office 365 F3, and Microsoft 365 F3 suites with Teams included, or the new EEA-specific versions of those suites without Teams.

Business customers

Microsoft 365 Business suites will continue to be available alongside the new lineup. Customers in the EEA and Switzerland will have the choice between:

Existing Suites: Microsoft 365 Business Basic, Microsoft 365 Business Standard, and Microsoft 365 Business Premium suites with Microsoft Teams included. New EEA-Specific Versions: Customers can also opt for the new EEA-specific versions of these suites without Microsoft Teams.

Closing word

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