Microsoft pushes Teams out of M365 and O365 bundle globally

Microsoft claims Teams push out of bundle will simplify pricing, with enterprise IT buyers possibly better off

Since October 2023, Microsoft unbundled Teams from its Microsoft 365 and Office 365 suites in the European Economic Area (EEA) and Switzerland.

At the time, Microsoft said it was addressing two concerns raised by the European Commission looking into anti-competitive practices. Specifically, Microsoft hoped that the unbundling of Teams would enable customers to choose a business suite without Teams at a price lower than those with Teams included. It said it would also be doing “more to make interoperability easier between rival communication and collaboration solutions and Microsoft 365 and Office 365 suites”.

According to a news report on Reuters, the company has now extended this policy globally. The company told the news agency: “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.”

In a research note, Fred Havemeyer, head of US AI and software research at analyst firm Macquarie, said: “Regulatory charges may persist if competitors’ complaints do not cease. Microsoft’s rationale for the new roll-out makes sense, in our view, though we note it is unlikely to deter competitors’ complaints altogether, particularly around the competitiveness of fees and the ongoing ability of Teams-competitive products to natively integrate with the rest of the Office application portfolio.”

Given past history, Havemeyer said that he would not be surprised if the unbundling changes Microsoft has made, fail  to sway the regulators. “Over the past decade, Microsoft has been fined $2.4 bn in Europe for bundling two or more products together,” he added.

In fact, in the US,  the Coalition for Fair Software (CFSL) has issued a statement highlighting Microsoft's restrictive practices. In the statement, CFSL executive director Ryan Triplette, said: “Microsoft’s restrictive software licensing practices extend well beyond Teams and are used to drive up cost and lock in customers to their products throughout the cloud stack, from Azure to security offerings. We urge all regulators, including the US Federal Trade Commission, to take action to address these practices and improve consumer choice.”

However, in spite of regulatory pressure, the research note suggests that the new pricing offers considerable flexibility for enterprise customers, according to Havemeyer.

“Customers can continue or switch to a new unbundled offer. The new lineup applies to both Microsoft 365 and Office 365, offers the packages issued to European markets in October to all regions, and offers a new standalone Teams for Enterprise customers at $5.25 per month,” he said.

Havemeyer added that, depending on terms, the pricing ranges across the M365 and O365 product range start at $7.75 per month (without CoPilot) and goes up to $54.75 per month.

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