Following Years Of Criticism, Microsoft Unbundles Office And Teams

(CTN News) – The latest version of Microsoft 365 and Office 365 subscription services excludes Microsoft’s business collaboration chat offering Teams, following scrutiny from EU regulators and complaints from rival Slack.

Some analysts say the move is unlikely to change Office 365’s commercial growth trajectory after Microsoft agreed last year to sell Office 365 without Microsoft Teams in the EU and Switzerland. The company said at the time it was addressing the European Commission’s concerns.

A global licensing approach ensures clarity for customers and streamlines negotiations and decision making, according to the company’s blog.

Microsoft introduced Teams in 2016 as a complement to Office 365. Over 320 million people use it.

A new standalone Teams offering is also being launched by Microsoft for enterprise customers outside of the European Union and Switzerland.

Microsoft allows businesses to pay separately for Teams, but it has also included the service in its popular Office 365 package. In some cases, competitors have claimed that the tech giant is exploiting its position unfairly to gain a competitive advantage.

The Salesforce-owned chat and video service, Slack, has called Microsoft’s actions “illegal” in the past, alleging the Windows maker forced Teams installation through its market-leading productivity suite and hid the cost of this service.

The company did not address these concerns in its blog, but it said it was offering flexibility to existing customers, allowing them to maintain their current bundled package that includes Teams, Office, and other products. The customers have the option of renewing their current deal, updating it, or selecting a more suitable offer.

Microsoft has introduced standalone pricing for Teams at $5.25 per user per month for new customers.

Additionally, Office packages without Teams will cost between $7.75 and $54.75, depending on the package and features included.

According to Morgan Stanley analysts, Microsoft’s Monday decision will not affect the commercial growth trajectory of O365, since more consolidation (not less) appears to be the direction of travel for CIOs due to macro pressures and technological advances like GenAI driving stronger gains for a broader set of suites and deeper data sets.

A further benefit of providing more choice for purchasing Teams is its compelling price, which is just $5.25/user per month for New Teams Enterprise (standalone), compared to $7.25/mo for Slack Pro and $12.50/mo for Slack Business+.

With a cost difference of only $2.25 between the Enterprise Suite without Teams and the Standalone, this equates to a pricing increase.

This will result in an increase in prices for new customers. According to the analysts, Teams costs only $0.50 per user per month in F1 SKUs and $1.25-$2.25 per user per month in Business SKUs.

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