With distinct subscriptions for Teams and other productivity software, Office 365 customers will now have the option to deploy alternative collaboration tools
Microsoft’s recent announcement of separating its Teams and Office bundles, selling its chat app Microsoft Teams independently from Microsoft Office, is likely to shake-up the landscape of the collaboration software market in near future.
The software giant had been confronted with an antitrust complaint from Salesforce-owned Slack, which it lodged with the European Commission in 2020, citing illegal trade practices due to the bundling of the two products.
In response to ongoing antitrust investigations by the European Commission and heightened competition concerns, Microsoft has announced its decision to sell its chat and video app Teams separately from its Office product suite on a global scale.
This strategic move comes after six months of already being initiated in Europe and Switzerland due to potential competition concerns and ongoing investigations by the European Commission.
As per Microsoft, customers currently subscribed to any of the suites will have new options. They can either continue using, renewing, and adding seats to their existing plans as usual, or opt to switch to the new lineup at their contract anniversary or renewal.
Why this development matters?
Teams, originally introduced as part of Office 365 in 2017, became a widely used platform for business communication and collaboration, especially during the pandemic. However, rivals have criticized Microsoft’s practice of packaging Teams with Office, alleging that it provides the company with an unfair advantage in the marketplace.
Globally, many enterprise users prefer Zoom over Teams for its superior features but choose to stay with Teams because of its bundled integration with Office 365. With separate subscriptions available for Teams and other productivity software, Office 365 customers will now have the flexibility to deploy alternative collaboration tools and base their choices solely on features, cost, and quality. Microsoft will also prioritize enhancing Teams to ensure it retains its customer base, focusing on improving usability and user-friendliness.
Despite Microsoft’s decision, analysts remain divided on the potential impact of this move. While some believe that separating Teams from Office may not have a significant effect on Microsoft’s market dominance, others emphasize the importance of addressing regulatory scrutiny and adapting to evolving market dynamics. For IT leaders, a significant question will be whether they should undertake the challenge of deploying conflicting licenses across their global enterprises.
Following the unbundling of Teams from Office in Europe in October 2023, Microsoft has observed minimal changes in the size of Teams’ user base, according to data from Sensor Tower.
According to data provided by Statista, Microsoft holds approximately 38% of the market share in collaboration software globally, followed by Google at 21% and Zoom at 15%. The revenue in the Collaboration Software market is projected to reach US$15.05 billion in 2024. Other significant players in the market include RingCentral, Slack, TeamViewer, and Webex.