Tech giant Microsoft (MSFT) could avoid a hefty anticompetitive EU fine after making price changes to its Office and Teams services.
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Unfair Bundling
The complaint against Microsoft first emerged five years ago when Salesforce (CRM)-owned workplace messaging service Slack complained to the European Commission that Microsoft was getting an unfair advantage by bundling chat and video app Teams with its Office product.
In 2023, German videoconferencing rival Alfaview filed a similar complaint against Microsoft. “Tying Teams with the other applications in the Microsoft 365 suite creates a significant distribution advantage for the U.S. company,” the German group said at the time.
The EU then launched an antitrust investigation into Microsoft that same year. As a result of the claim, Microsoft unbundled Teams from Office, offering both services separately to customers.
In February this year, Microsoft said it had also made changes to the prices of both services. It would sell Office without Teams for 2 euros less than Office with the video app, while Teams’ standalone would be sold for 5 euros a month.
Microsoft is also understood to have offered better interoperability terms to make it easier for rivals to compete.
Feedback from Rivals
Making Office with Teams more expensive could help rivals offer their products at competitive prices and entice users to switch to them.
It is anticipated that the European Commission will look more favorably on the new offer. It will likely seek feedback from rivals and customers in the coming months before making a final decision. However, it is understood that things could still change depending on the feedback and other factors.
EU fines can reach 10% of a company’s global annual revenue, so a reprieve will be welcome news for Microsoft. Although its stock was down 0.6% in pre-market trading.
It could also signal a thawing in the EU crackdown on U.S. tech with recent fines for Apple (AAPL) and Meta Platforms (META), as the bloc looks to seal a trade deal with the United States.
Is MSFT a Good Stock to Buy Now?
On TipRanks, MSFT has a Strong Buy consensus based on 30 Buy and 5 Hold ratings. Its highest price target is $600. MSFT stock’s consensus price target is $490.97 implying an 8.40% upside.
