Satya Nadella, CEO of Microsoft

Stephen Lam | Getty Images

Satya Nadella, CEO of Microsoft

Microsoft announced on Thursday a free version of its Teams app, stepping up competition with chat service Slack.

Until now, Microsoft only provided Teams to clients that pay for Office 365 and its portfolio of subscription productivity apps. Slack has offered both free and premium options since its public launch in 2014.

In promoting a free service, Microsoft may be leaving money on the table in the short term, but the company is betting that it will lure customers who will eventually be drawn to pay for Office as they grow and need more services and professional support. The free tier is limited to 300 users.

Slack isn’t the only competitor in the space. Last year Google introduced a Slack rival called Hangouts Chat as part of its G Suite bundle, less than six months after Microsoft unveiled Teams. Facebook also offers a chat app for work.

With all of those options, an easy and free on ramp has become that much more important.

“We wanted to remove all barriers to entry for all business, individuals and work settings to be able to use it,” said Lori Wright, general manager for Office 365 collaboration apps, in an interview. “I suspect that people will find ways to use the software in all aspects of their lives, whether personal or for work, but our design lens is for work.”

Microsoft doesn’t view the free service as a lightweight version of the paid offering, as is the case with Slack. It’s including availability in more languages and offering increased storage space, messaging search features and more integrations of third-party tools. It will also let users make group video and voice calls, while Slack’s free tier only enables calls between two people at a time.

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