Microsoft Unbundles Teams from Office To Address Antitrust Worries

Microsoft on Monday announced that it is unbundling Microsoft Teams from the larger Office 365 and Microsoft 365 productivity suites for all business customers, expanding on a licensing change it implemented last fall in certain European markets.

"Starting today, we are introducing 1) a new lineup of commercial Microsoft 365 and Office 365 suites that do not include Teams in regions outside the EEA [European Economic Area] and Switzerland, and 2) a new standalone Teams offering for Enterprise customers in those regions," the company said in a blog post.

The aforementioned EEA and Switzerland markets already underwent this switch last October.

What Prompted Microsoft To Unbundle Teams
First reported by Reuters, Microsoft's decision Monday to uncouple Teams from Office 365 and Microsoft 365 for global customers is part of its ongoing effort to address antitrust concerns levied against it by the European Commission (EC) last year. Back in July 2023, the EC opened an investigation to investigate "possible anticompetitive practices by Microsoft regarding Teams." Specifically, the EC was concerned that Microsoft's practice of selling Teams -- which boomed in popularity during the pandemic -- as part and parcel of its broader productivity suites was stifling competition and preventing other messaging platform vendors from integrating with Microsoft products.

"Microsoft includes Teams in its well-entrenched cloud-based productivity suites for business customers Office 365 and Microsoft 365. The Commission is concerned that Microsoft may be abusing and defending its market position in productivity software by restricting competition in the European Economic Area (‘EEA') for communication and collaboration products," the EC wrote in a press release at the time. "In particular, the Commission is concerned that Microsoft may grant Teams a distribution advantage by not giving customers the choice on whether or not to include access to that product when they subscribe to their productivity suites and may have limited the interoperability between its productivity suites and competing offerings."

The EC investigation was prompted by a 2020 complaint made by Slack Technologies, makers of the popular collaboration and chat platform.

In response to that July 2023 investigation, Microsoft changed its Microsoft 365 and Office 365 subscription model in the EEA and Switzerland. As of last October, sales of Teams in those regions were no longer tied to sales of Microsoft 365 or Office 365. Microsoft instead began offering a standalone Teams product, as well as "no Teams" versions of of Microsoft 365 and Office 365 SKUs.

At that time, Microsoft said it hoped "these changes balance the interests of our competitors with those of European business customers, providing them with access to the best possible solutions at competitive prices."

Microsoft echoed those sentiments in Monday's announcement that the licensing change would become effective for all new business customers worldwide, effective April 1.

"To ensure clarity for our customers, we are extending the steps we took last year to unbundle Teams from M365 and O365 in the European Economic Area and Switzerland to customers globally," a Microsoft spokesperson told Reuters. "Doing so also addresses feedback from the European Commission by providing multinational companies more flexibility when they want to standardise their purchasing across geographies."

What It Means
Starting April 1, new customers will not be able to buy the following Enterprise products with Teams bundled in:

  • Office 365 E1
  • Office 365 E3
  • Office 365 E5
  • Microsoft 365 E3
  • Microsoft 365 E5

This applies to all sales of these products, including those made through direct sales, as well as sales through volume licensing and Cloud Solution Provider (CSP) partners.

For new customers to get both the 365-branded Enterprise productivity suite of their choice with Teams, they will have to purchase a standalone Teams Enterprise subscription on top of their productivity suite. The per-user-per-month pricing for these is as follows:

New Office/Microsoft 365 and Teams pricing
Figure 1. New "no Teams" Office 365 and Microsoft Teams pricing. (Source: Microsoft)

Current customers of these Enterprise products can either "continue to use, renew, upgrade, and add seats to their current plans as usual," or switch to the new "no Teams" model when it comes time to renew their contracts. They can also "add new user subscriptions to suites without Teams or to the new Teams standalone at any time (including alongside suites with Teams)."

Microsoft will continue to sell Frontline and Business editions of Microsoft 365 and Office 365 that have Teams included, but it is also adding new "no Teams" versions to these lineups. Pricing per user, per month for these is as follows:

New no Teams pricing for Frontline SKUs
[Click on image for larger view.]   Figure 2. New "no Teams" pricing for Frontline SKUs of Office 365 and Microsoft 365. (Source: Microsoft)

No Teams pricing for Business SKUs
[Click on image for larger view.]   Figure 3. New "no Teams" pricing for Business SKUs of Microsoft 365. (Source: Microsoft)

In the end, the math works out in Microsoft's favor, according to Microsoft MVP and Microsoft 365 consultant Vlad Catrinescu.

"I think Microsoft did a very good move for their shareholders," Catrinescu said in an e-mail. "Before, at $57 USD per month, you would get Microsoft 365 E5 including Teams. Now, if you want Microsoft Teams, you need to pay $54.75 for Microsoft 365, plus $5.25 for Teams -- so, $60 per user per month. Every company today needs a communication tool for both internal asynchronous collaborations, or internal/external meetings and webinars. Even if a company buys Microsoft 365 E5 without Teams at $54.75 per user per month, they would need to choose if they buy Teams at $5.25 per user per month or buy Slack -- which is, at minimum, $12.50 USD for Business+. That doesn't include all compliance tools -- for that, you need the more expensive Enterprise Grid. And most companies will also need a Zoom or similar subscription for external meetings, webinars, etc.

"At the end of the day, I think most companies will still find it more advantageous to buy the new Microsoft 365 E5 and the Teams add-on for their enterprise collaboration needs, but it will now be a bit more expensive for them."

Notably, the changes taking effect on April 1 only apply to business users of Office 365 and Microsoft 365. According to a FAQ on Microsoft's blog, "Consumer, Academic, US Government, and Nonprofit-specific SKUs are not currently impacted."

About the Author

Gladys Rama (@GladysRama3) is the editorial director of Converge360.


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