Microsoft’s Rivals of the software giant got a reprieve on Monday after the software giant said it would unbundle its Teams and Office bundles after coming under scrutiny from European regulators.
Zoom’s video chat app took off during the coronavirus pandemic but has recently struggled to compete with Microsoft’s suite of communications products. Slack, now back sales forceI have been yearning for this kind of division for a long time, submit In 2020, the European Commission filed an antitrust complaint with the European Commission over what it believed was the illegal bundling of Teams and Office.
With Microsoft’s latest announcement, some customers will have to pay more to get the same features. For example, according to one company, new Office 365 E3 customers will pay $3 more per person per month after the split than for the combined product. Blog article and the previous price list.
Analysts at Mizuho Securities wrote in a note on Monday that “while customers view Zoom as a superior platform” and other vendors, “the bundling of MS Teams with Office 365 has been attracting customers to consider Teams.”
Zoom’s revenue growth, which peaked at more than 350% in 2020 and 2021, slowed to 2.6% in the most recent quarter and has been in single digits for seven consecutive periods.
“We believe the spin-off of MS Teams should help mitigate some of the headwinds of corporate attrition,” Mizuho analysts wrote. They recommended buying Zoom stock.
The blog post said organizations that have paid Microsoft’s bundled fees can continue to use Teams and Office as-is, or “if they wish to switch to a new product line, they can do so on contract anniversaries or renewals.”
Last year, Microsoft generated nearly $53 billion in revenue from Office (including Teams), up about 14% from 2022. Teams has more than 320 million monthly active users, Chief Executive Satya Nadella told analysts on the company’s earnings call in October.
Salesforce competes with Microsoft in several areas, including communications and collaboration tools, and acquired Slack for $27 billion in 2021, the most expensive acquisition in the company’s 25-year history.
Slack filed a complaint against Microsoft in Europe in July 2020, months before Salesforce announced the deal.
Slack’s then-general counsel David Schellhase said in a press release that “Microsoft is reverting to past behavior,” referring to the “browser wars” of the 1990s. “They created a weak copycat product and bundled it with their dominant Office product, forcing installation and preventing its removal.”
The year before, Slack didn’t express many concerns about Teams. Slack founder and former CEO Stewart Butterfield said on a December 2019 earnings call that while most of the company’s top customers use parts of Microsoft’s Office 365 suite, they choose to use Slack to send messages instead of Teams app.
Zoom shares fell about 1% on Monday, while Salesforce shares rose 0.4%. Zoom representatives did not respond to requests for comment, while Salesforce declined to comment.
this Financial Times Last year, citing unnamed people, it was reported that Microsoft would eventually allow businesses to choose to purchase productivity software subscriptions with or without Teams in an effort to thwart an EU competition investigation.A few months later, the European Commission disclosed A survey of Microsoft Teams and Office bundles.
exist replyMicrosoft began selling different subscriptions for Teams and other productivity software in 31 European countries.
“To ensure clarity for customers, we are extending the steps we took last year to unbundle Teams in M365 and O365 in the European Economic Area and Switzerland to customers globally,” a Microsoft spokesperson told CNBC in an email. ” Doing so would also address feedback from the European Commission and provide greater flexibility to multinational companies when they want to standardize sourcing across regions.”
watch: How Microsoft avoids regulatory troubles amid broader tech headwinds
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