The timing of Microsoft’s decision to unbundle Teams and Office was abrupt, even if the decision itself was perhaps less surprising.
Occurring only a month after the European Commission formally opened an antitrust probe into Microsoft‘s bundling of the two products after complaints of uncompetitive practices by Slack, the news means that the tech giant will offer skews in the European Economic Area (EEA). Notably, this doesn’t include the United Kingdom after Brexit.
What does that mean for Microsoft’s customers?
“They’re going to have a skew without Teams, so it’ll be $2 less than the equivalent bundles — both the business packages and the enterprise packages, but there’ll be no Teams in there,” Tom Arbuthnot, Microsoft Teams Expert and Co-Founder of Empowering.Cloud, told UC Today. “For those that want Teams, they’ll have to spend an extra €5 to add Teams back into that bundle.”
Crucially, this rule change doesn’t apply to existing customers in the EEA, only prospective ones.
“All existing customers can stay on their current packages; it doesn’t price-change for them,” Arbuthnot expanded. “But for new customers in those areas, they’ll have to buy the package, the bundle, the suite without Teams and then top up with Teams to get Teams.”
“If you’re in those countries in the EEA, you’ll have to buy essentially the same M365, the E3, the E5, and the business packages. But it’ll just be ‘No Teams’, and it’ll be $2 less. You’ll buy an additional skew to up-level to Teams, and you’ll be back to where you started before if you want to do that.”
Arbuthnot highlighted, however, that Microsoft didn’t make the uplift the same as the discount, so many customers will consider this a price rise as “they’re going to have to spend €3 to get to where they were before”.
These will be the immediate consequences for Microsoft customers — both existing and prospective. But what about the wider context?
In theory, this unbundling should make the UC and collaboration market more competitive. Arbuthnot explained: “If you’re a Slack shop or a Webex shop, you can save $2 a month because you don’t need Teams, and the theory is you could spend that elsewhere, and it makes it more competitive.”
“I’m sure the industry, in general, is appreciative of the opportunity to have a conversation about, ‘Well, you don’t need to buy that Teams bundle,'” Arbuthnot continued. “You can spend that money elsewhere.’ I don’t think $2 a user a month is a huge difference, and it’s interesting that Microsoft hasn’t made the uplift the same, but I think generally it’s good for the industry if there’s more competition, so from that point of view it’s a good thing.”
If the ramifications of the unbundling might take some time to observe in its market impact in the EEA and EU, where it’s already struck a chord has been across the Atlantic. Some American commentators have suggested a US regulatory body could push for a similar outcome in the States.
Zoom CEO Eric Yuan tentatively responded to Microsoft’s plans to unbundle Teams from Office, suggesting that the US Federal Trade Commission (FTC), which imposes antitrust law, could consider investigating similarly the EU Commission – but didn’t Microsoft. “No matter what, you’ve got to be fair,” Yuan commented during a Goldman Sachs technology event (via Bloomberg). “You should ask this question to the FTC as well.”
However, Arbuthnot argued that he doesn’t “think there’s an equivalent Commission with such big teeth to make them do this in the US”.
“(Microsoft) clearly chose to only do this in the areas affected by the EU legislation, so I doubt we’ll see it anywhere else,” he added. “But these kinds of things push back on future decisions about bundling as well, so it won’t just be this. There will be other things Microsoft do that it might consider more carefully or ‘How much can we bundle?'”
“Although I do think, generally, Microsoft has been looking to do extra skews and uplifts and up the revenue per user for things like Teams Premium and Copilot. They’re all add-ons.”
Arbuthnot raised another topic he found interesting — the pressure for Microsoft to allow other UC and collaboration platforms such as Zoom, Webex, or Slack to be more tightly integrated into Office.
“Microsoft is going to allow the web apps for Office to be integrated into those other platforms so they can bring up native Word within their platform,” he explained.
“On the API front, there are no new APIs. Microsoft said they document APIs better as part of this. I think that’s a bit hollow because companies like Zoom or Webex are capable of working out what the APIs are doing. They’ve got big dev teams.”
As far as Arbuthnot is concerned, where he’d like to see meaningful progress would be pressuring Microsoft to allow a genuine playing field between competitors. “Anything Teams could do with Office, let a Zoom or a Slack or a Webex do that with Office too. That would be a more long-standing benefit to those providers, I think,” he said.
“But we’ll see. This is what Microsoft has put forward. It doesn’t mean an investigation is instantly not happening or anything, so we’ll see what the market reaction is.”
