Microsoft unbundles Office and Teams globally following years-long criticism

Microsoft has introduced new versions of Microsoft 365 and Office 365 subscription services that exclude its business collaboration chat offering Teams following scrutiny from the European Union regulator and complaints from rival Slack.

The move — which some analysts say is unlikely to change the commercial growth trajectory of Office 365 — follows Microsoft agreeing to sell Office 365 suite sans Microsoft Teams offering in the EU and Switzerland last year. At the time, the software giant said it was making the changes to address the concerns raised by the European Commission.

“Globally consistent licensing helps ensure clarity for customers and streamline decision making and negotiations,” the company wrote in a blog post Monday. The company introduced Teams as a complementary offering to the Office 365 suite in 2016. It has amassed over 320 million users.

Microsoft said it is also introducing a new standalone Teams offering for enterprise customers outside the EU and Switzerland.

Though Microsoft has long allowed businesses to pay separately for Teams, it has also offered the service bundled in the widely popular Office 365 suite. The latter has upset some competitors with some asserting that the tech giant was leveraging its position in an unjust manner to gain a competitive edge.

Slack, owned by Salesforce, has termed Microsoft’s actions “illegal” in the past, alleging that the Windows-maker forced installation of Teams to customers through its market-dominant productivity suite and hid the true cost of the chat and video service.

Microsoft didn’t address these concerns in its blog, but said as part of the change, it is offering flexibility to its existing customers, allowing them to maintain their current bundled package that includes Teams, Office and other products. These customers can choose to renew their current deal, update it or select a new offer that better suits their needs.

For new customers, Microsoft has introduced standalone pricing for Teams at $5.25 per user per month. Additionally, Office packages without Teams will be available at prices ranging from $7.75 to $54.75, depending on the specific package and features included.

The new Microsoft suite offering with Teams (Image: Microsoft)

Microsoft is also introducing a new variant of Microsoft 365 Business that excludes Teams. Image Credits: Microsoft

In a note seen by TechCrunch, Morgan Stanley analysts estimated that Microsoft’s Monday decision is “unlikely to change the O365 commercial growth trajectory, as more consolidation (not less) seems to be the direction of travel for CIO’s due to macro pressures and technological progress like GenAI driving stronger gains for the broader suites and deeper data sets.”

“Further, providing more choice for purchasing Teams clearly illustrates its compelling value, at just $5.25 per user per month for New Microsoft Teams Enterprise (standalone), which compares to Slack Pro at $7.25/mo and Slack Business+ at $12.50/mo. The price reduction in the Enterprise Suites without Teams is only $2.25, yet the Standalone cost is $5.25. For new customers, this equates to a pricing increase. Using Teams in F1 SKU’s costs only $0.50 per user per month and using Teams in Business SKU’s cost only $1.25-$2.25 per user per month,” wrote the analysts.

Image credits: Morgan Stanley

The story was updated with details from Microsoft’s official blog and Morgan Stanley’s comment.


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