Since Microsoft is dismantling Teams, that may not have the impact on Slack as you think

One of the main reasons why Slack joined forces Sales force in 2021 in a $28 billion deal that was intended to give the telecom company leverage to compete with it Microsoft. For years, company co-founder Stuart Butterfield has railed against Microsoft bundling Teams with Office 365, calling it anticompetitive, and at one point saying Microsoft was “unhealthily obsessed with killing Slack.”

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

Microsoft announced this morning that it will finally unbundle Teams from Office 365 in the future, though existing customers can continue to use volume licensing.

Butterfield stepped down from Slack at the end of 2022, but he seemed less concerned about Microsoft after becoming part of the CRM giant, telling TechCrunch’s Connie Loizos in 2021 that Teams seemed to be more focused on meeting software like Zoom than Slack, which is He was not aware of the complaint status his company filed before it became part of Salesforce.

For its part, Salesforce had no comment on the dismantling announcement, but Microsoft’s bundling strategy appears to have worked well, with the company reporting that it has more than 320 million users worldwide. Compare that with Slack, which has 32 million users, or 10% of Microsoft’s total users. It’s hard to know exactly what that means given the differences in how the two companies count their users, but it’s clear that Microsoft has opened the door to a major breakthrough.

Maybe Butterfield was right, but perhaps it was too late to think about it. “While Microsoft is breaking up Teams simply to avoid antitrust chaos, this is a good thing for Salesforce/Slack for sure, but in many ways it could be a Pyrrhic victory,” Alan Belz Sharp, founder and principal analyst at Deep Analysis, told TechCrunch. The market has matured to the point where many major companies have made up their minds, and since switching solutions is not trivial, unbundling Teams is unlikely to have a meaningful impact on market share.

Microsoft’s announcement appears to allow them to have their cake and eat it too, keeping their existing customers under the existing Office 365 bundling agreement, while charging future customers to use the product, presumably to give the company an argument with regulators that they’ve broken up Teams and aren’t breaking any disruptive rules. By competition..

In fact, Holger Müller, an analyst at Constellation Research, says this may be the first instance where anti-competitive regulations help a vendor’s business. “Microsoft has simply sold Teams to enough businesses with existing Office accounts that they now no longer need the power and muscle of an enterprise licensing agreement,” Mueller said.

What’s more, instead of helping Slack, he sees this helping Microsoft get Teams into more accounts where companies weren’t buying Office 365 licenses. Redmond can now sell standalone Teams licenses to non-Microsoft stores more easily, all with Build goodwill with regulators, and continue to stick with Slack in the standalone market battle.

This may not be the outcome Butterfield envisioned when he started complaining about Microsoft all those years ago, but the regulatory outcome doesn’t always come out the way you expect, especially when the market shifts dramatically in the intervening years — or when Microsoft’s market shifts dramatically. The pooling strategy simply worked.