Office 365 Sans Teams: Does it Matter?

Trust Microsoft to play it safe when antitrust raises its head. The company, which launched its Office 365 suite without Microsoft Teams in the EU and Switzerland last year, has now standardized its offering worldwide. The new versions of Microsoft 365 and Office 365 would henceforth exclude its business collaboration chat offering. 

“Globally consistent licensing helps ensure clarity for customers and streamline decision making and negotiations,” the company said in a blog post yesterday.  “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 and Switzerland, and 2) a new standalone Teams offering for Enterprise customers in those regions. 

Microsoft’s bread is buttered on both sides

Does this mean, Microsoft is having the proverbial cake and eating it too? Well, analysts seem to think so, and for good reasons too. Readers would recall that the company had first come out with Office 365 subscription services sans Teams following scrutiny from the European Union’s antitrust regulator over complaints by rival Slack. 

So, what has changed now for Microsoft to convert the exception into the rule? For starters, the company has always allowed enterprises to pay separately for Teams and also bundled it with its popular Office 365 suite, a move that made competition see red with some noting that it was leveraging its position in an unjust manner to gain a competitive advantage. 

The current announcement (read it again if you have to), allows Microsoft to keep existing customers under the prevailing Office 365 bundling agreement. For new customers, it can offer the unbundled package and charge separately for Teams. By doing so, it falls off the regulatory radar while keeping its 320 million users worldwide on the old subscription. 

Keeping the existing customers hooked 

In fact, market watchers believe that the move is meant to just sidestep regulatory issues as the market for collaborative software tools has matured enough where large enterprises have made their choice and there is little chance of them wanting to jump onto a new subscription and then look for another collaborative software for video calls.  

Which is why most analysts are unanimous in their view that the latest exercise would have little or no impact on Microsoft’s market share. At the same time, it would allow the company to claim high moral ground at a later date, if so required. As for Slack, the company has since done a $28 billion deal with Salesforce (in 2021) and seems disinterested in what’s going on with Microsoft’s unbundling exercise. 

In fact, Slack co-founder Stewart Butterfield is no longer part of the entity, having stepped down at the end of 2022 and become part of the CRM giant. His views around the issue too seemed to have toned down considerably while claiming that Teams was focussed more on virtual meeting software and that it wasn’t such an issue for Slack. As for Salesforce, these moves (by Slack in 2020 and Microsoft in 2024)  didn’t even warrant a comment. Not surprising, given that their client base is hardly 10% of what Microsoft lays claim to. 

This antitrust case actually benefits Microsoft

A deeper look at the developments over the past year and more actually seem to suggest that Microsoft could actually benefit from the anticompetition regulation. By selling Teams to a considerable number of enterprise customers bundled with Office 365, it no longer needs to bother on the enterprise licenses to bolster its revenues on this front. 

Of course, this doesn’t mean that Microsoft has capped out the enterprise market. They will continue to sell the new Office 365 package and push Teams as an add-on when required – the existing customer list for the earlier package serving as adequate testimony for using the entire suite. 

One needn’t be surprised if Microsoft starts pushing Office 365 to those already holding Teams and vice versa. Imagine selling Teams as that collaborative video technology in offices that are using other solutions and by doing so, also building on the goodwill with regulators across geographies as and when they wake up. 

All of this makes us wonder whether Butterfield had thought things through when Slack had started whining about Microsoft some years ago and raised regulatory concerns. Looks like this one too has gone Satya Nadella’s way!