Microsoft Unbundles Teams: What the new licensing means for your business

Microsoft just announced a sweeping change to its Microsoft 365 and Office 365 Commercial licensing, set to take effect globally on November 1, 2025. This move is a direct response to regulatory concerns raised by the European Commission regarding the bundling of Microsoft Teams with productivity suites. But beyond licensing flexibility and new pricing, Microsoft is also making a strong commitment to interoperability and data portability. This means organizations are no longer locked into a single collaboration platform – customers who prefer alternatives to Teams can now integrate Microsoft 365 more seamlessly, ensuring their data remains accessible and workflows stay connected across different tools. For organizations across Europe and beyond, this marks a pivotal moment in how collaboration tools are packaged, priced, and integrated.

What happened? The regulatory backdrop

For years, Microsoft Teams has been bundled with Microsoft 365 and Office 365 suites, making it the default collaboration platform for millions of users. However, the European Commission raised concerns that this bundling could limit competition and customer choice. In response, Microsoft agreed to introduce more flexible licensing options, not just for Europe, but for commercial customers worldwide. This means the end of a “one-size-fits-all” approach and the beginning of a new era of choice and transparency in Microsoft’s productivity offerings.

What’s changing? New suite options and pricing structure

Starting November 1, 2025, Microsoft will reverse the end of sale for all Microsoft 365 and Office 365 Enterprise suites with Teams (O365 E1, E3, E5 and M365 E3, E5). Commercial customers – whether through Volume Licensing or Cloud Solution Provider – can create new subscriptions or transition existing ones to suites with Teams. Academic, US Government, and Nonprofit SKUs are not currently impacted.

The most significant change is the introduction of suite options with or without Teams. Customers now have the flexibility to select a productivity suite that best fits their needs, whether they want Teams included or prefer to use alternative collaboration tools. Teams will also remain available as a standalone product, giving organizations even more control over their licensing strategy. 

The price delta: Ensuring fairness and transparency

To ensure fairness, Microsoft has committed to a fixed price difference (“delta”) between suites with Teams and those without. For example, Microsoft 365 E3/E5 and Office 365 E3/E5 will have a price delta of €8.00 ($8.55) per user/month. Suites without Teams will always be cheaper by this fixed amount, and standalone Teams must cost at least as much as the delta. This prevents customers from bypassing the intended pricing structure by purchasing products separately.

Key price changes:

• Enterprise suites without Teams will see price reductions (e.g., M365 E3/E5 and O365 E3/E5 reduced by $6.30 per user/month).
• Teams standalone pricing will increase to match the delta.
• Business and frontline suites will also see adjusted price deltas, ensuring consistency across product lines.
• USD price deltas will remain fixed for seven years, while EUR prices may fluctuate with exchange rates.

Who is impacted? Understanding the scope

These changes affect all commercial customers globally – whether you’re purchasing through Volume Licensing or CSP. If you’re an academic institution, US government entity, or nonprofit, your SKUs are not currently impacted. For organizations in the European Economic Area (EEA), Microsoft is offering special guarantees: discounts applied to suites with Teams will also apply to suites without Teams at the same percentage rate if purchased directly from Microsoft. Partners may offer these guarantees, but it’s at their discretion.

Customers on multi-year contracts can switch from suites with Teams to those without at their annual renewal, providing additional flexibility for long-term planning. 

Why should clients care? Strategic implications

This isn’t just a technical licensing update – it’s a strategic opportunity for organizations to rethink their collaboration and productivity investments. Here’s why you should care:

• Licensing Flexibility: Organizations that don’t use Teams or prefer alternatives can now optimize costs and licensing, choosing only what they need.
• Cost Optimization: The new pricing structure allows clients to compare options and potentially reduce spend, especially for those who don’t require Teams for every user.
• Contract Renewal Opportunities: Multi-year contract holders can switch to suites without Teams at renewal, maintaining discounts and adapting to changing business needs.
• Regulatory Compliance: These changes ensure compliance with EU competition regulations and foster a more open ecosystem, reducing risk for global enterprises.
• Strategic Planning: Understanding these changes is crucial for budgeting, procurement, and IT strategy. Organizations can now tailor their Microsoft investments to align with business priorities and user adoption.
• Interoperability & Data Portability: Perhaps most importantly, Microsoft’s renewed commitment to interoperability and data portability means customers are no longer locked into a single collaboration platform. Organizations using alternative solutions to Teams can now integrate Microsoft 365 more seamlessly, ensuring that data can move freely and workflows remain connected. This empowers IT teams to build hybrid environments, leverage best-of-breed tools, and future-proof their digital workplace strategy.

SoftwareOne – Your guide through change

Navigating Microsoft’s licensing landscape can be complex, especially with regulatory-driven changes like these. At SoftwareOne, our team brings deep expertise in Microsoft licensing, cloud solutions, and regulatory compliance. We help clients:

• Assess current licensing and costs, identifying opportunities for optimization.
• Compare suite options and develop a strategy that fits your organization’s unique needs.
• Plan for contract renewals and transitions, ensuring you maximize value and minimize disruption.

Understand the impact of these changes on your organization, from budgeting to user experience.