As Microsoft is unbundling Teams, this may not affect Slack as much as you think Tech Crunch

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A primary reason why Slack joined forces with Salesforce in a $28 billion deal in 2021 was the communications company's preference to compete with Microsoft. For years, company co-founder Stewart Butterfield has fought against Microsoft's bundling of Teams with Office 365, calling it anti-competitive and saying at one point that Microsoft has an “unhealthy obsession with killing Slack.”

The company even went so far as to file a complaint against Microsoft with the European Union in 2020.

This morning, Microsoft announced that it is unbundling Teams from Office 365 in the future, although existing customers can continue to use the bundled license.

Butterfield left Slack at the end of 2022, but he seemed to care less about Microsoft after he became part of the CRM giant, telling TechCrunch's Connie Loizos in 2021 that teams seemed more focused on meeting software like Zoom than Slack, and the complaint his company filed before he became part of Salesforce. Status unknown.

Salesforce, for its part, had no comment on the unbundling announcement, but Microsoft's bundling strategy seems to have worked so well that the company reports that it has more than 320 million users worldwide. Compare that to Slack, which has 32 million users, or 10% of Microsoft's total. It's hard to know what that means given the differences in how the two companies count their users, but Microsoft has opened up a significant lead.

Butterfield may be right, but it may be too late. “While Microsoft is unbundling Teams to avoid antitrust confusion, it's certainly good for Salesforce/Slack, but in many ways it could be a pyrrhic victory,” Alan Pelz-Sharp, founder and principal analyst at DeepAnalysis, told TechCrunch. Since the market is mature enough for many large organizations to make their choice and switching solutions is not a trivial matter, breaking up teams is unlikely to have a significant impact on market share.

Microsoft's announcement allows them to have their cake and eat it, keeping their current customers under the existing Office 365 bundling agreement, charging future customers for using the product, and giving the company an argument with regulators that they're breaking teams. And did not violate any anti-competition rules.

In fact, Holger Müller, an analyst at Constellation Research, said this could be the first time an anti-competitive regulation helps a vendor's business. “Microsoft has sold Teams to enough companies with its existing Office accounts that it no longer needs the force and power of an enterprise license agreement,” Mueller said.

What's more, he thinks it will help Microsoft get Teams into more accounts where companies don't buy Office 365 licenses, rather than helping Slack. Redmond can now more easily sell independent teams' licenses to non-Microsoft shops, building goodwill with regulators and still picking up slack in a stand-alone market battle.

That may not have been the outcome Butterfield envisioned when he started complaining about Microsoft all those years ago, but the regulatory outcome doesn't always turn out the way you'd expect, especially when the market has changed so dramatically in the intervening years — or Microsoft's bundling strategy has simply worked.



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