Microsoft president Brad Smith's statement on Wednesday about the change came in the wake of a complaint filed by German software provider Next Cloud, France's OVHcloud, Italian cloud service provider Aruba and an association of cloud service providers from Denmark, Reuters reported.
The anti-trust suit was filed in December last year against Microsoft for allegedly forcing companies to use its file-hosting service One Drive on Windows.
A statement from NextCloud at the time said: "OneDrive is pushed wherever users deal with file storage and Teams is a default part of Windows 11," the statement said.
"Behaviour like this is at the core of this growth of the tech giants and has to be stopped."
In the last decade, Microsoft has paid a fine of €1.6 billion (A$1.8 billion) to the EU over various violations.
The company will now help other cloud providers to offer Windows and Office directly as part of a solution they can sell and host on their own infrastructure.
The European Cloud Alliance, of which Microsoft is a member, welcomed the company's announcement.
“Cloud adoption and the development of European digital capabilities are a priority for the European Union," the ECA executive director Kim Gagné said in a statement.
"Microsoft has a unique role to play in supporting this effort. Brad Smith’s announcement today shows both understanding of and commitment to supporting this priority.
"The European Cloud Alliance is heartened that Microsoft has listened to its European partners in charting this way forward. Hopefully, other large tech companies will take a similarly positive and productive approach to competition in the cloud.”