Microsoft splits Teams from Office – but is it too little too late?

Microsoft has announced that it will sell Teams and its Office products separately on a global basis to appease anti-competition concerns. But critics claim the damage has already been done.

With the EU threatening to impose yet another antitrust fine on Microsoft, the company had already begun to sell Teams and Office products separately in the EU. Now the company has decided to apply the policy worldwide, meaning new customers will no longer be able to buy Microsoft 365 or Office 365 bundles with Teams included.

Existing customers won’t be forced to take out two separate subscriptions, however. “As in the EEA and Switzerland, customers with existing subscriptions that include Microsoft Teams will be able to continue using plans they have already chosen,” Microsoft said in a statement announcing the changes.

Damage already done?

Microsoft’s decision to split Teams from Office follows an antitrust complaint filed by rival Slack, which claimed that the company was harming competition in the collaboration software market by bundling Teams with the Office products.

Teams shot to prominence during the pandemic, with companies suddenly forced to find a way to help previously office-bound staff work collaboratively from home. With Microsoft offering Teams at no extra expense for businesses already signed up for Office products, it rapidly grew in popularity compared to standalone rivals such as Slack.

Indeed, by the end of 2020, Slack was sold to Salesforce in a deal worth close to $30 billion to help it compete against Microsoft’s marketing muscle.

Consequently, many feel the regulators didn’t act swiftly enough to prevent irreparable damage to competition in the collaboration software market. Even former Windows chief Steven Sinofsky claims the regulators were too tardy.

“Beware of unintended side effects but it seems very likely this will have a positive revenue impact and no share impact,” Sinofsky tweeted. “The regulators moved slowly.”

Has Slack made Teams stronger?

As Sinofsky suggests, separating Teams from the more expensive Office software could actually prove beneficial for Microsoft’s business. It allows the company to sell standalone Teams packages for companies that aren’t already wedded to Microsoft’s Office software, competing directly with Slack.

With millions of post-pandemic workers now used to working in Teams, it’s possible Microsoft will pick up business from companies that previously couldn’t afford the expensive Enterprise bundles, creating the “positive revenue impact” that Sinofsky mentioned.

Microsoft will sell Teams on a standalone basis to enterprise-scale business for $5.25 per seat, per month, starting from April 1.

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