I have the same problem. All workers in our company have M365 Business Premium. I have Macbook, and i can set default open files to local app (word, excel...)but other workers which have windows, in settings Microsoft Teams has only option : Open in teams, or open in browser...
A loot of people have the same problem. And this is wery weird that Macbook have this option, and windows not...
We tried reinstall all office, delete cache and still the same.
Microsoft - please HELP.