📋 Executive Summary
In response to EU antitrust scrutiny (Slack and Zoom complaints about bundling advantage), Microsoft unbundled Teams from Office 365/M365 suites in the EEA from October 2023, then globally from April 2024. New enterprise suites no longer include Teams by default — it's sold as a separate $5.25/user/month add-on. Base suite prices dropped ~$2.25, creating a net ~$3/user increase for organizations that still need Teams.
Existing customers are temporarily grandfathered but should plan for eventual transition. This playbook covers regional impact, pricing comparison, the full collaboration licensing stack, renewal negotiation tactics, and alternative solutions CIOs should evaluate.
📑 Table of Contents
- Background: Why Microsoft Unbundled Teams
- Impact by Region: Europe vs. Global
- Ensuring Teams Access Under New Agreements
- Bundled vs. Unbundled Plans: Pricing Comparison
- Microsoft's Collaboration Stack & Add-On Licenses
- Auditing Entitlements, Renewals & Negotiating Continuity
- Alternative & Hybrid Collaboration Solutions
- Frequently Asked Questions
Background: Why Microsoft Unbundled Teams
In mid-2023, European regulators launched an antitrust investigation into Microsoft's practice of bundling Teams with Office 365/M365. Competitors (Slack/Salesforce, Zoom) complained that including Teams "for free" gave Microsoft an unfair advantage. Microsoft responded by unbundling Teams in the EEA and Switzerland from October 1, 2023, then extending the approach globally by April 1, 2024.
Regulatory Driver
EU antitrust concerns about anti-competitive bundling. Giving customers the option to buy suites without Teams at a lower price and making it easier to use rival collaboration solutions.
Effective Price Increase
Suite prices dropped ~$2.25/user, but Teams add-on costs $5.25/user — a net ~$3/user increase for organizations continuing to use Teams. Analysts called it a "sneaky price hike."
✅ CIO Recommendations — Background
- Stay informed on regulatory changes — understand the EU antitrust background to explain the change to leadership and end-users.
- Communicate early — proactively inform IT, finance, and procurement that Microsoft's bundling policy has changed.
- Monitor ongoing developments — the EU investigation continues; Microsoft's approach may be adjusted further by authorities.
- Engage vendor management — discuss changes with your Microsoft account manager or licensing partner early.
Impact by Region: Europe vs. Global
🇪🇺 Europe (EEA & Switzerland)
From October 1, 2023, new enterprise customers in the EEA no longer have Teams included by default. Suite prices reduced by €2/user/month; Teams available as standalone add-on for €5/user/month. Net result: €3 increase per user for same functionality with Teams added back.
Small business and frontline plans offered both options — with or without Teams. Existing enterprise customers allowed to stay on current bundled plans and renew or true up seats on existing bundles.
Key: European organizations signing new contracts post-October 2023 see Office 365 E3 (without Teams) at €2 less, but pay €5 for each Teams user — €3 more than the old bundled price.
🌍 Global Regions (April 2024+)
From April 1, 2024, all new Office 365/M365 enterprise customers worldwide use the unbundled model. Enterprise SKUs with Teams bundled are no longer sold to new customers globally. New customers must purchase two SKUs: one for the suite (without Teams) and one for standalone Teams.
Microsoft cited "globally consistent licensing" to reduce confusion for multinationals. Government (G), Education (E), and nonprofit plans remain bundled as before. Frontline (F) and Business suites still offer choice of with or without Teams.
Grandfathering: Existing customers can continue to use and even renew or expand current bundled plans for now. But there's no guarantee Microsoft will allow legacy bundles to persist indefinitely beyond the next renewal cycles.
✅ CIO Recommendations — Regional Impact
- Identify affected agreements — review all Microsoft licensing agreements by region; any new agreements/renewals after the policy change are likely affected.
- Leverage the grace period — if you have existing bundled licenses, plan how long you can keep them. Renewing as-is may postpone unbundling costs.
- Plan for eventual transition — start budgeting for the "two SKU" approach (base + Teams) even if you can delay it at next renewal.
- Verify subscription types — Government, Education, nonprofit, Frontline, and Business plans may have different rules. Confirm status for each.
Ensuring Teams Access Under New Agreements
Since suites may no longer include Teams by default, you must add Teams as a separate component in your licensing order. Microsoft introduced a standalone "Microsoft Teams Enterprise" SKU — purchase two SKUs per user: one for the core suite (without Teams) and one for the Teams application itself.
Each user who needs Teams must have both an Office 365/M365 suite license and a Teams Enterprise add-on license assigned. Verify every user — otherwise they will lose Teams access once you transition to the new licensing model. No technical difference for users; it's purely a licensing and entitlement change.
✅ CIO Recommendations — Preserving Teams Access
- Explicitly include Teams in new contracts — do not assume it's included by default anymore. Quote the separate Teams add-on SKU in your purchase order.
- Verify license assignments — implement a license assignment policy or script to automate assigning both SKUs. Prevent human error where users get Office 365 E3 without the Teams add-on.
- Plan for the additional cost — get finance approval for the ~$2–$3/user increase ahead of renewals. Include the separate Teams line item in IT budget projections.
- Run a pilot — move a small group to the new "suite + add-on" licensing and confirm meetings, calls, and channels work as normal before full rollout.
- Coordinate timing — ensure Teams add-on is provisioned at the same time as your new Office 365 license. No gap should exist between old and new agreements.
Bundled vs. Unbundled Plans: Pricing Comparison
| Enterprise Plan | Old Price (with Teams) | New Price (without Teams) | Teams Add-On | New Total (with Teams) |
|---|---|---|---|---|
| Office 365 E1 | $9.00 | $7.75 | + $5.25 | $13.00 |
| Office 365 E3 | $23.00 | $20.75 | + $5.25 | $26.00 |
| Office 365 E5 | $38.00 | $35.75 | + $5.25 | $41.00 |
| Microsoft 365 E3 | $36.00 | $33.75 | + $5.25 | $39.00 |
| Microsoft 365 E5 | $57.00 | $54.75 | + $5.25 | $60.00 |
Per user/month commercial list prices (USD). New Total = suite without Teams + Teams Enterprise add-on.
The "no Teams" versions are only modestly cheaper (~5–10% drop), while the Teams add-on is a larger cost. Net effect for users with Teams: +$3/user/month (~13% increase on E3, ~8% on E5). Microsoft now has flexibility to raise Teams prices independently as a separate SKU — previously, bundled pricing was stable for years.
The unbundled model does allow strategic savings: skip Teams for users who don't need it (back-office accounts, shared mailboxes, kiosks) and save $5.25/user/month. Under the old model, you paid for Teams whether those users used it or not.
✅ CIO Recommendations — Plan Options
- Use "No Teams" strategically — identify user groups that don't need Teams (service accounts, shared mailboxes, email-only users) and license them without Teams.
- Model your costs — calculate 100% Teams licensing vs. mixed (e.g., "20% without Teams saves $X annually"). Present to finance for budget justification.
- Consider multi-year agreements — lock in pricing for 3 years to shield against future Teams add-on price increases.
- Track Teams utilization — use M365 admin reports to see active Teams users. Remove licenses from users/departments consistently not using Teams at next true-up.
- Update procurement systems — reflect the new two-SKU model in internal catalogs (e.g., "Office 365 E3 (No Teams)" + "Teams Enterprise add-on" as separate items).
Microsoft's Collaboration Stack & Add-On Licenses
| Component | What It Does | Licensing | Cost |
|---|---|---|---|
| Teams Core | Chat, video meetings, VoIP, channels, file sharing | Separate add-on for enterprise suites (post-unbundling). Still bundled in some Business/Frontline plans. | $5.25/user/mo (Enterprise add-on) |
| Teams Phone (Cloud PBX) | Enterprise telephony — make/receive calls, voicemail, call queues, auto-attendant | Included in E5. Add-on required for E1/E3/Business plans. Does NOT include minutes or phone numbers. | ~$8/user/mo (Teams Phone Standard) |
| PSTN Calling Plans | Phone numbers and minutes for external calls (domestic/international) | Separate per-user plans. Alternative: Operator Connect / Direct Routing via third-party telecom. | $12–$15/user/mo (domestic plan) |
| Audio Conferencing | Dial-in phone numbers for Teams meetings; dial-out to add participants by phone | Included in E5. Free add-on SKU available for E1/E3/Business. Must be assigned in admin center. | Free for most plans (verify assignment) |
| Teams Premium | Advanced meeting features — branding, analytics, AI-generated tasks | Optional add-on. Not required for normal operation. | $10/user/mo |
| Teams Rooms Pro | Meeting room device licensing (conference rooms with Teams Rooms hardware) | Per-device license (separate from user licensing). Basic version included with certified devices. | $40/device/mo |
An "M365 E5 (no Teams)" license still includes Phone System and Audio Conferencing — but without Teams, there's no app to use them with. Always add the Teams add-on if you plan to use voice features. E5's bundled value (Phone System, Audio Conferencing, Power BI, advanced compliance) may justify the higher price for certain user segments.
✅ CIO Recommendations — Stack & Add-Ons
- Map collaboration needs to licenses — create a matrix of user types and required licenses (Teams, Phone, Calling Plan, etc.) for each category.
- Audit current add-ons — check for unused Phone licenses, unassigned Audio Conferencing, or opportunities to consolidate a la carte add-ons into E5.
- Ensure Audio Conferencing is enabled — verify in admin center that the free dial-in license is assigned to all meeting organizers. Don't assume auto-assignment.
- Plan telephony strategy — factor in Teams Phone add-ons plus Calling Plans or Direct Routing costs. Negotiate these into your EA for better rates.
- Keep documentation current — document which SKUs your org uses and the rationale for each user category. Update as licensing changes at renewal.
📋 Need help navigating Microsoft's unbundled licensing model? Our independent advisors specialize in Microsoft EA optimization and renewal negotiation.
Microsoft EA Optimization →Auditing Entitlements, Renewals & Negotiating Continuity
🔍 Audit Current Entitlements
Begin with thorough inventory of your M365 licensing footprint. Identify all licenses/subscriptions, which ones bundle Teams, which users have them, and when agreements expire. Key questions: How many users on E1/E3/E5 that bundle Teams today? Any standalone Teams or third-party solutions already in use? What add-on licenses (Phone, Audio Conferencing) are assigned? When do agreements renew?
Analyze Teams usage importance. If Teams has high adoption (primary meeting platform, hundreds of Teams spaces), continuity is paramount. If usage is patchy, you may have flexibility to drop some licenses.
Start Early: Inventory licenses at least 6–12 months before renewal. Use Microsoft partner license assessments or M365 admin reports to get a clear picture. Rushed decisions at renewal lead to overspending.
📋 Renewal Strategy & Negotiation
If legacy bundles available: Weigh pros (avoid immediate price increase, no user disruption) vs. cons (delaying the inevitable, may lose leverage or face steeper changes later if Microsoft discontinues old SKUs).
Negotiate price or concessions: Microsoft knows this is effectively a price hike. Use that as leverage — negotiate discounts on the Teams add-on, broader agreement discounts, or price protections. Request caps on annual price increases for the Teams SKU. Aim for multi-year agreements to lock pricing.
With alternatives in mind: Gently signal you're evaluating options (Zoom, Slack). Microsoft reps may be more amenable to discounts if they sense competitive risk. Be honest but strategic.
Compliance Risk: Ensure no users are accidentally underlicensed — using Teams without the proper add-on license after switching to new SKUs could surface in a Microsoft audit. True up any missing licenses before or during transition.
🔄 Transition Planning & Continuity
If swapping thousands of users from "E3 with Teams" to "E3 without Teams + Teams add-on," coordinate carefully. Swap during low-usage periods. Run in parallel: assign new licenses before removing old ones (Microsoft typically allows 30-day overlap during EA transitions).
Test on a small group first. Ensure no gap between old agreement expiration and new agreement start. Keep records of all Microsoft promises and communications about grandfathering and transition terms.
License Optimization: Use the audit to right-size all licenses. Maybe upgrade some users to E5 (covers Phone System), or downgrade others to E1 + Teams if they only need email and collaboration. The unbundling forces a re-look — take the opportunity.
Alternative & Hybrid Collaboration Solutions
| Alternative | Best For | Approx. Cost | Key Consideration |
|---|---|---|---|
| Zoom Workplace | Video meetings, webinars, external client calls | $13–$22/user/mo | Strong video quality; widely used externally. Can complement M365 for meetings while skipping Teams. |
| Slack (Salesforce) | Persistent chat, channels, developer workflows | $7.25–$12.50/user/mo | Strong integrations ecosystem. Consider for messaging if dropping Teams chat; combine with Zoom for video. |
| Cisco Webex | Enterprise telephony, secure meetings, regulated industries | $12–$25/user/mo | Strong telephony integration. Viable full alternative for organizations with existing Cisco infrastructure. |
| Google Workspace | Full productivity alternative (Gmail, Meet, Chat, Docs) | $6–$18/user/mo | Complete platform replacement. Eliminates M365 dependency entirely but requires major migration. |
| Hybrid: M365 + Zoom/Slack | Organizations with mixed tool preferences | Suite + alternative cost | Use M365 without Teams for productivity; add Zoom/Slack for collaboration. Saves $2.25/user on Teams. |
The unbundling gives organizations freedom to say "we don't need Teams" and invest elsewhere. But the $2.25 saved from not having Teams won't fully fund Zoom or Slack ($5–$15/user). The decision is more about functionality and user preference than direct cost savings. For organizations already using Slack or Zoom alongside M365, the unbundling simplifies the commercial picture — you can stop paying for a tool you don't use.
A hybrid model is increasingly common: Zoom for external client meetings (familiarity), Teams internally for daily collaboration — or vice versa. Different departments may have different needs. The key is making a deliberate choice rather than paying for everything by default.
✅ CIO Recommendations — Alternatives & Hybrid
- Assess current tool landscape — survey which collaboration tools are actually in use across departments. You may already be paying for Zoom/Slack alongside Teams.
- Evaluate switching costs — migration effort, user training, integration changes, and data migration costs may outweigh savings from dropping Teams.
- Use alternatives as negotiation leverage — even if you plan to keep Teams, having competitive quotes strengthens your position with Microsoft.
- Consider a hybrid model — M365 without Teams for productivity + Zoom or Slack for collaboration. This works well for organizations with existing multi-tool environments.
- Track interoperability — Microsoft committed to making it easier for rival solutions to integrate with Office 365. Monitor improvements to Zoom/Slack M365 integrations as part of the regulatory remedy.
Key Takeaways
~$3/User Net Increase
Organizations continuing to use Teams face a ~$3/user/month effective price increase. Suite prices dropped ~$2.25 but the Teams add-on costs $5.25 — purely a packaging change, not new functionality.
Two SKUs Now Required
Every user needing Teams must have both the Office 365/M365 suite license and a separate Teams Enterprise add-on assigned. Verify assignments to prevent accidental access loss.
Strategic Savings Possible
Skip Teams for users who don't need it (service accounts, email-only users, kiosks) to save $5.25/user. Track utilization — the unbundled model enables more granular license management.
Negotiate with Leverage
Use the effective price hike as negotiation leverage. Request discounts, price caps, and concessions. Multi-year agreements lock pricing. Competitive alternatives (Zoom, Slack) strengthen your position.
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Fredrik Filipsson
Fredrik Filipsson brings 20+ years of enterprise software licensing expertise, including experience working directly for IBM, SAP, and Oracle. He has helped hundreds of organizations — including numerous Fortune 500 companies — optimize Microsoft Enterprise Agreements, navigate licensing changes, and negotiate renewal terms that protect budgets against vendor-driven cost increases.