Tech News : Headaches For MSPs As Microsoft Unbundles Teams

Microsoft’s announcement that it will sell its chat and video app Teams separately from its Office product globally is likely to cause considerable headaches for IT departments and managed service providers.

Why Unbundle? 

Teams is to be unbundled and sold separately globally (it’s been unbundled in the EU since last October) in response to an antitrust lawsuit and to avert the possible associated fine.

An antitrust lawsuit against Microsoft over its bundling of Teams with its Office suite in the EU was initiated based on a complaint from competitor Slack Technologies in 2020. Teams was originally bundled with Office 365 as a replacement for Skype back in 2017 and became popular during the pandemic.

However, rival Slack (now owned by Salesforce) alleged that Microsoft was illegally tying its Teams application to its dominant Office productivity suites, thereby leveraging its market dominance to stifle competition unfairly.

The European Commission said at the time: “Microsoft may grant Teams a distribution advantage by not giving customers the choice on whether or not to include access to that product when they subscribe to their productivity suites.” 

This led to The European Commission investigating Microsoft over its amalgamation of Office and Teams since 2020 and then to Microsoft separating Teams for Office 365 In October last year in the European Economic Area and Switzerland.

Pressure 

Continued pressure from the regulator and the desire to (understandably) avoid a fine that could potentially be up to 10 per cent of its global revenue has now led Microsoft to announce that it will now be unbundling Teams and selling it separately, globally.

How Much?

Starting from April 1, customers can either continue with their current licensing deal, renew, update or switch to the new offers. Unbundled Teams will be available for new customers as a standalone app for $5.25, whereas Office packages without Teams will range between $7.75 and $54.75.

It’s worth noting that these figures may vary by country and currency and Microsoft hasn’t yet disclosed prices for current packaged products.

Trouble For MSPs 

Unfortunately, although the move may be good news for Microsoft’s rivals, it’s not a welcome announcement from the perspective of the many managed service providers (MSPs) who are resellers of Microsoft’s packages and products. Indeed, for MSPs it is likely to mean headaches in several key areas, such as:

– Service delivery and integration. Unbundling may disrupt how MSPs bundle services, demanding changes in delivery models due to the deep integration of Teams with Office applications.

– Billing and subscription management Separate billing for Teams and Office could complicate financial operations, requiring more administrative effort to manage distinct subscriptions and compliance.

– Training and support. A standalone Teams setup might increase support queries and necessitate updated training materials, placing additional demands on MSP resources.

– Client satisfaction and retention. Crucially, the change could confuse clients who are accustomed to (and expect) the convenience of integrated packages, potentially affecting their satisfaction and loyalty (during the adjustment phase), lowering the barriers to exit from their supplier.

– Market competition. Facing competitors offering more cohesive solutions, MSPs may need to reevaluate their offerings and pricing to stay competitive.

What Does This Mean For Your Business? 

This is not an unexpected development, given Microsoft’s unbundling of Teams in the EU last October, continued regulator and competitor pressure, and the threat of a massive fine. It’s good news for Microsoft’s competitors like Slack, however, for Microsoft, some say that even this concession and change in its product strategy may not be enough to avoid a fine.

The complications and unsettling effects it could have on UK business customers could also cause some considerable problems for the UK’s many MSPs. For example, they may find themselves having to navigate a more complex service landscape, facing challenges in service integration, billing management, and customer support. This could mean that MSPs will have to now monitor the impacts carefully and adjust their strategies to minimise the likely negative effects on their business and client relationships.

This could mean having to adapt current offerings and trying their best to ensure seamless integration and support for both Teams and Office applications independently – an extra challenge in an already difficult market.

Tech News : EU Teams To Be Unbundled From 365

Following pressure resulting from a formal investigation by the European Commission over a possible breach of competition rules, Microsoft has announced that it will begin unbundling Teams from Office 365 and Microsoft 365 in European markets.

Antitrust Investigation 

Following a complaint by Slack three years ago, this July the European Commission opened an antitrust investigation into Microsoft’s bundling of its Teams app with its Office suite over concerns that it could be in breach of the EU’s competition rules.

Slack Complaint 

In the July 2020 complaint that led to the EC investigation, Slack said on its website: “Microsoft has illegally tied its Teams product into its market-dominant Office productivity suite, force installing it for millions, blocking its removal, and hiding the true cost to enterprise customers”.  

David Schellhase, General Counsel at Slack said: “Slack simply wants fair competition and a level playing field. Healthy competition drives innovation and creates the best products and the most choice for customers. Competition and antitrust laws are designed to ensure that dominant companies are not allowed to foreclose competition illegally. We’re asking the EU to be a neutral referee, examine the facts, and enforce the law.”   

The Investigation – Concerns 

The EC’s investigation centred on concerns that Microsoft’s bundling of Teams with its other software could put rival online meetings and communications software (like Slack and others) at a disadvantage. The EC said that Microsoft’s practices “may constitute anticompetitive tying or bundling and prevent suppliers of other communication and collaboration tools from competing, to the detriment of customers in the European Economic Area”, and that, “The commission is concerned that Microsoft may be abusing and defending its market position in productivity software by restricting competition in the EEA for communication and collaboration products.” 

Will Unbundle It, Starting In October 

Microsoft’s response to the concerns outlined in the investigation has been for Nanna-Louise Linde, Vice President, Microsoft European Government Affairs to announce, “proactive changes that we hope will start to address these concerns in a meaningful way, even while the European Commission’s investigation continues and we cooperate with it.”

The ‘proactive changes’ (unbundling) will impact Microsoft 365 and Office 365 suites for business customers in the European Economic Area and Switzerland. Microsoft says that, in the coming months, it will take the following steps:

– Beginning October 1, 2023, Teams will be unbundled from Microsoft 365 and Office 365 suites in the EEA and Switzerland. Microsoft says that instead it will simply sell these offerings without Teams at a lower price (€2 less per month or €24 per year).

– It will enhance its existing resources on interoperability with Microsoft 365 and Office 365, e.g. to allow companies like Zoom and Salesforce to create tailored and integrated experiences across Exchange, Outlook and even Teams.

– It will create new ways to enable third-party solutions to host Office web applications. For example, Microsoft says it will develop a new method for hosting the Office web applications within competing apps and services, much like it already does in Teams.

Investigated Before 

As some commentators have pointed out, Microsoft has been investigated before by the EU for similar bundling practices. For example, in the early 2000s, the EU ordered Microsoft to unbundle its media player from its Windows operating system, arguing that the bundling practice was anticompetitive. In fact, Microsoft has incurred £1.9bn in EU antitrust fines over the last decade for practices that breach EU competition rules, e.g. by bundling products together.

That said, Microsoft certainly doesn’t have the ‘monopoly’ on triggering antitrust investigations. For example, back in 2018, Google was fined £3.8 billion for pre-installing its search engine and browser on Android devices, which was seen as an abuse of its dominant position.

What Does This Mean For Your Business? 

Having already incurred almost a couple of £ billion in fines from the EU over antitrust-related issues in the last decade, it seems that Microsoft would now rather comply than have to offer more self-limiting remedies and risk a mega-fine of (potentially) up to 10 per cent of its total annual turnover. The dominant position of its suite of products means that any bundling is jumped-upon quickly by competitors, some of whom (Slack and Zoom) have grown dramatically and gained in power, share, and influence since the pandemic restrictions skyrocketed their user-numbers.

In its defence, Microsoft says that including modern communication and collaboration capabilities in its business suites was simply in response to what customers expect from a modern work solution. Unfortunately, Microsoft’s market dominance and history make it difficult for Microsoft to do anything other than hold its hand up and politely agree to unbundling.

For competitors like Slack, this may seem like a victory and something that’s long overdue. For customers in Europe, the positive spin is that Microsoft’s suite of products without Teams bundled will cost a little less, but then there’s still the added inconvenience of having to add Teams and then presumably pay the bit of extra money on top for it. As mentioned above, Microsoft’s certainly not the only big tech company to have run into problems over antitrust rules and since the tech world is still dominated by just a few major players, it’s unlikely to be the last time we see this sort of thing.