Microsoft sidesteps billions in EU fines with Teams unbundling deal

BRUSSELS (CN) — The European Union accepted binding commitments from Microsoft Friday to end a two-year antitrust investigation into Teams, allowing the tech giant to avoid fines of up to $24.5 billion by agreeing to restructure how it sells workplace software across Europe.

The resolution stems from a complaint filed by Slack — now owned by Salesforce — in 2020, alleging Microsoft stifled competition by forcing its chat application on customers purchasing Office productivity software. The EU launched a formal probe in July 2023, with Germany’s alfaview joining as a second complainant.

The commitments require Microsoft to offer European customers discounted versions of Office 365 and Microsoft 365 without Teams, allow existing customers to switch away from bundled packages and provide competitors with better integration tools for Microsoft’s ecosystem.

EU regulators found that Microsoft had illegally forced Teams on customers buying its dominant Office suite since April 2019, giving the chat platform unfair advantages that helped it reach 320 million users while making it nearly impossible for rivals to compete.

“Organizations big and small across Europe and around the world rely heavily on videoconferencing, chat and collaboration tools, especially since the coronavirus pandemic,” said the EU’s chief for competition, Teresa Ribera, in a statement Friday. “With today’s decision, we make binding for seven years or more Microsoft’s commitments to put an end to its tying practices that may be preventing rivals from effectively competing with Teams.”

In late 2023, as EU investigators were building their case, the company reported that Teams had attracted over 2,000 apps to its store and generated more than 145,000 custom enterprise applications — figures that underscored the platform’s deep integration across business workflows that Brussels viewed as evidence of illegal bundling.

Brussels found Microsoft wasn’t merely packaging products together — it was leveraging its Office monopoly to dominate an entirely separate communications market.

Microsoft had initially tried to address regulatory concerns by offering Teams-free Office packages in Europe starting in 2023, but European investigators deemed these changes insufficient. In June 2024, the European Commission — the EU’s executive arm — sent Microsoft formal charges — essentially accusing the company of illegally abusing its dominant position since April 2019.

The commitments “represent a clear and complete resolution to the concerns raised by our competitors and will provide European customers with more choices,” said Microsoft’s attaché for European Affairs Nanna-Louise Linde. The company emphasized its “responsibility as a global technology provider to follow and adapt to the laws and regulations in the countries where we do business.”

Microsoft noted it has been building communication tools into its productivity suites for over a decade, evolving from Office Communicator in 2007 through Lync and Skype for Business Online before launching Teams.

Teams’ explosive growth — from roughly 20 million users in 2019 to 320 million today — represents approximately 80% of Microsoft’s entire Office 365 user base of 400 million paid seats, according to company financial reports. The scale of Teams’ success shows how Microsoft’s bundling strategy created barriers for competitors trying to reach the same customers.

According to industry analysis, Teams now dominates the workplace chat market — while Microsoft, Zoom, Google, Cisco and Slack together control more than 80% of the entire market for workplace communication tools.

The formal charges put Microsoft in serious legal trouble. If found guilty of antitrust violations, the company could have faced fines of up to 10% of its global revenue — potentially $24.5 billion based on Microsoft’s 2024 annual sales of $245 billion, per Courthouse News analysis — plus court-ordered changes to its business practices.

The deal includes an independent watchdog who will monitor Microsoft’s compliance and settle disputes. If the company breaks its promises, EU regulators may impose fines without having to prove any wrongdoing.

Under the seven-year agreement, Microsoft avoided a formal antitrust violation by promising deeper price cuts on Teams-free packages than originally proposed — including a commitment to increase the price difference by 50% on business suites —and requiring prominent website advertising of unbundled options. Microsoft must also let customers export their data to competing services and allow rivals to integrate Office web applications into their platforms.

The interoperability and data portability commitments will remain binding for 10 years, extending beyond the seven-year timeframe for other provisions.

Microsoft also agreed to extend the unbundling requirements globally, a decision the company said would ensure “globally consistent licensing helps ensure clarity for customers and streamlines decision-making and negotiations” — an approach Microsoft has used in past regulatory settlements to avoid the complexity of maintaining separate business models across different regions while potentially heading off similar regulatory action elsewhere.

Both Slack and German competitor alfaview, which had filed the original complaints, dropped their cases after a market test conducted between May and June 2025.

Microsoft shares traded with minimal volatility following the settlement announcement, according to financial market data, suggesting investors viewed the outcome favorably as the company avoided massive penalties while resolving a major regulatory overhang.

Friday’s settlement represents the latest chapter in Europe’s increasingly aggressive campaign to rein in Big Tech. Just one week ago, the EU slammed Google with a $3.2 billion fineover digital advertising practices — the search giant’s fourth major EU penalty since 2017.

Other ongoing disputes highlight the challenge Brussels faces in translating regulatory victories into real competitive benefits. Companies like Spotify have repeatedly criticized Apple’s compliance with existing rules, arguing tech giants find ways to circumvent the spirit of new laws while technically following the letter.

In turn, Apple has even begun withholding new features from EU users entirely — the company announced that Europeans won’t get access to its new AI-powered live translation feature for AirPods, citing the EU’s Digital Markets Act complications.

While U.S. regulators have largely taken a hands-off approach, the EU has made tech antitrust a centerpiece of its digital policy — and American companies are paying billions in fines and compliance costs.

The settlement could embolden antitrust regulators in other markets, with similar investigations in the U.S. underway and the U.K. having recently concluded a cloud computing investigation that recommended further scrutiny of Microsoft. On Friday, the U.K. announced a 400 million pound ($542 million) contract with Google Cloud.

The EU’s Ribera has hinted that other Microsoft products could face similar scrutiny, noting the commission’s broader review of how companies control multiple related markets in cloud computing.

The Microsoft settlement comes as European regulators unleash a sweeping overhaul of digital rules across the tech industry. Also taking effect Friday: theEU Data Act, a comprehensive law that rewrites how data flows through Europe’s economy.

The new rules give consumers control over data from connected devices like cars and industrial machinery, eliminate cloud switching fees by 2027 and protect European data from “unlawful” foreign government access requests. Companies must now design internet-connected products to allow data sharing and let customers easily move between cloud providers.

It’s a massive regulatory package that touches everything from smart home devices to business cloud contracts.

The timing isn’t coincidental. European regulators are systematically reshaping how U.S. tech giants can operate in Europe’s half-billion-person market, deploying new regulations like precision strikes against specific business practices.

Microsoft’s Teams victory during the pandemic, when remote work sent usage soaring, may have ultimately cost the company far more than any fine. The seven-year commitment essentially rewrites how Microsoft can sell its most profitable products in its second-largest market — affecting a core component of the company’s cloud business that helps drive customers to higher-priced subscription plans.

This week, Spotify griped that its European users are stuck with an inferior app blaming Apple’s App Store restrictions, while the same features are available to U.S. users following recent legal victories over Apple.

Courthouse News correspondent Yuval Molina is based in Brussels, Belgium.