Microsoft (NASDAQ:MSFT) is seeking to defuse EU antitrust scrutiny by offering Office suites without Teams at a reduced price and has drawn the European Commission’s request for public feedback on its proposed commitments.
Under the plan, Microsoft would sell versions of Office 365 and related productivity bundles without Teams, let customers switch to Teams-free suites mid-contract, enhance interoperability for rival communication apps, and guarantee data portability out of Teams; most obligations run for seven years, while interoperability and portability commitments extend to ten years.
The EC said interested parties have until mid-June to submit their views, reflecting its June 2024 statement of objections that accused Microsoft of abusing its dominant position in SaaS productivity apps since April 2019, following Slack’s original 2020 complaint.
Shares were little changed in premarket trading, trading flat at recent levels. The move follows earlier reports that Microsoft could avoid a hefty EU fine after unpacking its latest offer, and underscores management’s aim to balance regulatory concessions without diluting its product bundle strategy.
EU competition chief Margrethe Vestager has signaled that these commitments, if approved, would settle the formal investigation opened in July 2023, but stakeholder feedback will shape any final order. For investors, the proposed remedy could remove a major overhang on Microsoft’s valuation in Europe, where cloud and Office subscription growth are core drivers of its double-digit revenue gains.
With Azure and AI strategy already cementing long-term growth, resolving the Teams bundling case would help ensure continued momentum in Microsoft’s largest non-U.S. market. Investors will watch for the EC’s decision after the consultation period closes in the coming weeks.
GuruFocus’s latest 12-month consensus price target for Microsoft sits at $503.52, implying an 11.1% upside from current levels. The high estimate of $650 signals that some analysts see as much as a 43% rally over the next year, while the low target of $423 suggests limited downside of about 7%.
This article first appeared on GuruFocus.
