Microsoft (MSFT) Splits Teams and Office to Counter EU Scrutiny

Microsoft MSFT has announced that it will sell its chat and video app, Teams, separately from its Office product worldwide. This decision comes six months after the tech giant unbundled the two products in Europe, a move aimed at averting a potential European Commission (EU) antitrust fine.

The EU has been investigating Microsoft's bundling of Office and Teams since 2020, following a complaint by Slack, a competing workspace messaging app owned by Salesforce CRM, accusing MSFT of anti-competitive behavior by forcing Teams onto Office subscribers and obscuring its true cost.

Teams, initially introduced to Office 365 in 2017 and later replaced Skype for Business, gained significant traction during the pandemic, particularly for its video conferencing capabilities.

To address these concerns and comply with regulatory feedback, MSFT began selling the products separately in the EU and Switzerland on Oct 1, 2023. Despite the unbundling, Microsoft Teams' user base has remained relatively stable. Sensor Tower data indicates that the platform's monthly active users on mobile remained unchanged at 19 million in the first quarter of 2024 compared with the previous quarter.

In response to the unbundling, the company has introduced new commercial Microsoft 365 and Office 365 suites that exclude Teams outside the European Economic Area and Switzerland. Additionally, a standalone Teams offering for Enterprise customers in these regions has been launched.

Effective Apr 1, customers can choose to continue with their existing licensing deals and renew, update, or switch to the new offerings. Pricing for Office without Teams ranges from $7.75 to $54.75 for new commercial customers, while Teams Standalone is priced at $5.25. Prices may vary by country and currency.

Despite these measures, MSFT's unbundling may not fully shield it from further regulatory scrutiny. EU antitrust charges, potentially focusing on the level of fees and compatibility of rival messaging services with Office Web Applications, are expected in the coming months.

With a history of EU antitrust fines totaling approximately $2.37 billion over the past decade, Microsoft faces potential charges of up to 10% of its global annual turnover if found guilty of antitrust breaches.

Microsoft Corporation Price and Consensus

 

Microsoft Corporation Price and Consensus

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Advancements in Office 365 Copilot to Drive Growth Amid Probe  

Microsoft has been making significant advancements in its Copilot and Windows aimed at empowering organizations in the evolving landscape of work while grappling with regulatory scrutiny.

The company is now extending Copilot’s capabilities across its entire product spectrum, including Windows, Microsoft 365, Microsoft Teams and Edge.

Central to this innovation is the integration of Copilot into Windows 11 and Windows 365. Copilot in Windows 11 acts as an orchestrator, securely executing tasks across applications, files and the web, thereby enhancing user efficiency and personalization. With Windows 365, employees gain the flexibility to work securely across various devices, whether on a physical PC or via a Cloud PC, providing options for seamless and secure connectivity.

Microsoft also introduced two new Surface for Business devices, namely the Surface Pro 10 and Surface Laptop 6.

Shares of this Zacks Rank #3 (Hold) company have gained 36.7% year to date compared with the Zacks Computer and Technology sector’s growth of 40.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

According to a Mordor Intelligence report, the Cloud AI Market size is estimated at $67.56 billion in 2024 and is expected to reach $274.54 billion by 2029, witnessing a CAGR of 32.37%, which suggests significant growth prospects for Microsoft, Amazon AMZN, Alphabet GOOGL and other tech giants making constant contributions in the field of AI.

Alphabet-owned Google Cloud has unveiled fresh solutions aimed at assisting healthcare and life sciences entities in achieving interoperability, utilizing data analytics and implementing generative AI tools to enhance patient outcomes. Google Cloud's Vertex AI Search for Healthcare is tailored to aid developers in creating improved assistive technology for clinicians and healthcare system staff to alleviate administrative challenges.

AMZN’s cloud-computing arm, Amazon Web Services (“AWS”), extends its partnership with NVIDIA to power its portfolio with generative AI technology. NVIDIA Blackwell GPU platform, which was introduced at GTC 2024, will be available on AWS. Notably, the platform features GB200 NVL72, with 72 Blackwell GPUs and 36 Grace CPUs interconnected by fifth-generation NVIDIA NVLink. This will aid in speeding up inference workloads for resource-intensive, multi-trillion parameter language models.

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