News Analysis
On September 11, the European Union accepted Microsoft's proposal to separate its Teams communication platform from its Office productivity apps, a decision that will likely mean Microsoft will avoid a significant antitrust fine.
The move follows a ruling in June 2024 from the European Commission, the EU's executive body, which stated Microsoft violated competition rules by unfairly bundling Teams with its Office and Microsoft 365 software suites. The commission's investigation was prompted by a 2020 complaint from Slack, a rival chat service now owned by Salesforce.
Table of Contents
- Next Steps for Microsoft Teams
- The Great Microsoft Teams Unbundling: Winners and Losers
- Employee Experience: Productivity Gains or Fragmentation Risks?
- What IT Leaders Must Consider Before Switching Collaboration Tools
- The Bigger Picture: Antitrust, AI and the Future of Enterprise Collaboration
- A New Inflection Point
Next Steps for Microsoft Teams
According to a European Commission statement, Microsoft will:
- Make versions of its Microsoft 365 suite without Teams available at a reduced price.
- Allow customers with long-term licenses to switch to suites without Teams.
- Provide interoperability for key functionalities between communication and collaboration tools that compete with Teams.
- Allow customers to move their data out of Teams to facilitate the use of competing solutions.
The commitments extend well into the next decade, with most regulatory requirements binding the company for seven years while data transfer and system compatibility obligations stretch to 10 years.
Microsoft had begun this separation process in 2023, first unbundling Teams from M365 in European markets during 2023, then expanding this standalone model globally the following year, but the agreement effectively ends the dispute — at least for now.
"Organizations big and small across Europe and around the world rely heavily on videoconferencing, chat and collaboration tools, especially since the coronavirus pandemic," European Commission Commissioner for Competition Teresa Ribera said in the statement. "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. Today's decision therefore opens up competition in this crucial market."
It's a big move from Microsoft. And while the threat of a potentially massive antitrust fine — up to 10% of its worldwide annual turnover — was undoubtedly an incentive, the fact that the EU has demonstrated in this case and in other disputes with corporations based in the US, Europe and further afield that it will not back down would also have been part of the decision.
The Great Microsoft Teams Unbundling: Winners and Losers
The regulatory shift creates a fascinating paradox in the enterprise collaboration market. While Microsoft loses its bundling advantage, the company may strengthen its position through other means.
This creates two distinct paths for organizations, according to Richard Harbridge, Microsoft MVP and technology and ecosystem strategist at ShareGate. "While many organizations will still have Teams as the 'center of work,' it does mean this may change for non-Microsoft focused orgs over time, especially if competitors are already heavily deployed,” he said.
Microsoft's AI strategy with Copilot however, might render this entire debate moot. "The bigger issue is what this might eventually mean for other experiences," Harbridge warned. "Microsoft wants to be the UI for AI and if Copilot becomes the natural 'center of work' in their vision, then expect them to get ahead of these risks by making Copilot even more interoperable and connected than it already is today."
For competitors, this creates both opportunity and challenge. Jason Marshall, chief growth officer at Huntress, views the regulation as transformative: "This EU regulation is a massive blow to Microsoft. By fracturing this, the law disrupts Microsoft's streamlined system and opens opportunities for competitors to capture disgruntled customers."
Yet Touro University Graduate School of Technology's Jeremy Rambarran tempers Marshall's optimism: "By removing Microsoft's bundling advantage, competitors like Slack, Zoom and Google Workspace now have a stronger cost argument and fewer barriers to adoption. However, they still need to match Microsoft's integration depth and compliance capabilities to win at scale."
Employee Experience: Productivity Gains or Fragmentation Risks?
The impact of the EU ruling on Microsoft Teams bundling on day-to-day work reveals sharp divisions among experts about what employees can expect.
"Microsoft 365-centric organizations have been working on Teams consolidation, and many are working toward Copilot consolidation, and neither of these will change,” Harbridge said.
Rambarran paints a more chaotic picture: "Employees may face more fragmentation if organizations adopt a mix of collaboration tools — duplicate channels, extra notifications and more context switching. Shifting away will require migration work, workflow rebuilding and retraining, potentially lowering productivity in the short-term."
But James Cadman, chief customer officer at Luware, goes even further, suggesting the regulatory push for competition might harm productivity. "This may mean employees working less efficiently, as more manual effort will be required for tasks that were once streamlined. While regulators want more competition, managing multiple disparate tools creates challenges that aren't trivial," he said.
What IT Leaders Must Consider Before Switching Collaboration Tools
The unbundling forces IT departments to make explicit decisions they previously avoided through default bundling. "It eases pressure on IT to consolidate to Teams (good for some IT leaders, bad for others depending on their existing strategy, preferences or biases)," Harbridge said, acknowledging this change benefits different organizations differently.
Others view this as ultimately positive for thoughtful decision-making. "IT leaders are more likely to explicitly evaluate collaboration tools. Some will deploy Teams only where Microsoft integration is critical, while others may use Slack or Zoom elsewhere. This encourages modular adoption but requires stronger governance," Rambarran said.
However, Nathan Bensch, Microsoft specialist at enVista, advocates caution: "IT leaders should reassess deployment models, licensing and integration strategies, especially for enterprises that relied on the bundled setup." He warns that "real impacts may not be felt for at least a year."
The results of this ruling will shift how organizations approach their technology stack. Rather than simply selecting tools, organizations must now decide whether they prefer a unified ecosystem where applications share data seamlessly and security policies apply consistently, or a more flexible approach where specialized tools can be mixed and matched. The first approach reduces complexity but may limit innovation; the second maximizes choice but increases management overhead.
"For large organizations, deep integration across Microsoft 365 still makes Teams the clear choice. Some may explore alternatives, but ecosystem integration and unified security remain major benefits," said Cadman.
Marshall also acknowledges that switching costs create natural barriers: "Competitors may attract some organizations with lower rates or offers, but smooth transitions will drive most decisions."
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This suggests that while the unbundling opens the door for competitors, walking through it requires significant organizational effort that many enterprises may avoid.
The Bigger Picture: Antitrust, AI and the Future of Enterprise Collaboration
The EC's regulatory action represents more than a Microsoft Teams specific issue: it signals a broader reckoning for dominant software vendors across the industry.
"We have already seen this shift with AI as the new interface layer. In most organizations, a mixture of tools is already the norm," Harbridge said. He mentioned emerging solutions like model control protocols (MCP) and AI agent systems, where different software components must work together, regardless of vendor boundaries.
The precedent has implications for other market leaders. "Anytime you have an unfair advantage, you need to think about how long you can maintain it," Harbridge warned. "Most SaaS orgs need to consider when and how they will decouple capabilities as they scale and gain market share."
It's an outlook Rambarran shares. The EU ruling signals that bundling to maintain dominance attracts antitrust action, he said. Vendors should emphasize data portability, interoperability and transparent pricing to avoid scrutiny.
Yet this regulatory pressure conflicts with technological trends toward consolidation, particularly in AI. "Consolidation will likely accelerate because there will be stronger benefits (especially in the AI arena) for having content consolidated versus just connected — especially for Microsoft 365 Copilot in the near term," Harbridge observed.
A New Inflection Point
The Teams unbundling will likely reshape enterprise software markets in subtle but lasting ways. Microsoft loses its automatic distribution advantage but retains deep integration benefits that may prove more valuable in the long-term. Competitors gain pricing flexibility and reduced barriers to adoption, yet still face the challenge of matching Microsoft's comprehensive ecosystem.
For organizations, the change transforms a bundling decision into a strategic choice about technological architecture — integrated suites versus modular best-of-breed solutions. The ultimate winners will be enterprises that thoughtfully evaluate their collaboration needs rather than defaulting to vendor convenience, though the complexity of that evaluation may favor the familiar integrated approach for many.
Most significantly, this ruling establishes regulatory precedent that market dominance through bundling will face scrutiny, likely influencing how all major software vendors approach product integration and pricing strategies in an era where AI capabilities are rapidly reshaping competitive dynamics.