Does Microsoft 365 E3 Have Teams? (w/Examples) + FAQs

Yes, the standard Microsoft 365 E3 suite includes Microsoft Teams as of April 2026. However, Microsoft also sells a separate SKU called Microsoft 365 E3 (no Teams) at a lower price, and that distinction drives most of the confusion buyers face today.

The confusion comes from a global licensing change that took effect November 1, 2025, when Microsoft restored the “with Teams” suites worldwide after first unbundling Teams in 2023 in response to a European Commission antitrust probe. The governing rule here is Article 102 of the Treaty on the Functioning of the European Union, which bans abuse of a dominant market position, and the consequence Microsoft faced was a possible fine of up to 10% of its annual global turnover if it did not offer Teams-free suites at a “meaningfully lower” price.

If you buy or manage Microsoft 365 for a U.S. business in 2026, this matters because you now pick between two E3 flavors at two different prices, and the wrong pick can cost your company tens of thousands of dollars per year or leave 500 users without a chat app on Monday morning. A 2024 Gartner survey cited by many IT resellers found that over 320 million paid Microsoft 365 commercial seats were active worldwide, and every one of those seats now has a Teams / no-Teams choice attached to renewal.

Here is what you will learn in this guide:

• 📦 What the standard Microsoft 365 E3 license includes, and exactly which Teams features come with it per the Microsoft 365 service description.
• 💸 How the “with Teams” and “no Teams” E3 SKUs compare on price, both the November 2025 list prices and the July 1, 2026 price increase.
• ⚖️ Why the European Commission forced Microsoft to unbundle Teams, what the binding commitments require, and how U.S. FTC and DOJ scrutiny shapes the same market.
• 🧑‍💼 Real named-person scenarios for procurement leads, IT admins, and MSPs, with dollars-and-cents math for each path.
• ⚠️ The seven biggest mistakes buyers make on E3 renewals, the pros and cons of each SKU, and ten FAQs that close the loop.

What Microsoft 365 E3 Actually Includes in 2026

Microsoft 365 E3 is the mid-tier “enterprise workhorse” suite that most knowledge-worker-heavy U.S. companies standardize on. The Microsoft licensing page lists E3 at $36.00 per user per month on an annual commitment through June 30, 2026, and the December 2025 price notice confirms a jump to $39.00 per user per month starting July 1, 2026.

The suite bundles three product families into one license: Office 365 E3 for productivity, Enterprise Mobility + Security E3 for identity and device control, and Windows 11 Enterprise E3 for the operating system layer. A plain-English way to think about it is that E3 gives one user the apps, the security wrapper, and the OS license all at once, which is why it costs more than a consumer Microsoft 365 plan.

The consequence of picking the wrong E3 flavor shows up on renewal. If you buy Microsoft 365 E3 (no Teams) and your users expect Teams, you either pay $5.25 per user per month on top for the Teams Enterprise standalone add-on or you deny users a tool they already rely on, and both outcomes are politically painful inside an IT department.

A real-world example ties it together. Imagine Priya Raman, a director of IT at a 1,200-seat Chicago law firm, who inherits a renewal quote from her reseller. If Priya picks the E3 (no Teams) SKU at $27.45 per user per month to save money, but her attorneys use Teams every day for client calls, she must add Teams Enterprise back on at $5.25 per user per month, which erases most of the discount and adds administrative overhead.

A common misconception is that “no Teams” means Teams is blocked or disabled. It does not. It simply means the Teams service plan is not attached to that user’s license, so the Teams client will not activate for that user until a Teams license is assigned separately in the Microsoft 365 admin center.

Core Apps and Services Inside E3

The productivity half of E3 comes from Office 365 E3, which includes Word, Excel, PowerPoint, Outlook, OneNote, and Publisher (PC only) as installable desktop apps, plus their web versions. Exchange Online Plan 2 gives each user a 100 GB mailbox and unlimited archive, which matters for firms with long document-retention duties under rules like SEC Rule 17a-4.

SharePoint Online Plan 2 and OneDrive for Business with 1 TB of starting storage round out the content layer, and the Microsoft 365 storage documentation confirms OneDrive storage can scale to 5 TB or more per user in tenants with five or more qualifying licenses. Viva Engage (formerly Yammer), Stream, Sway, Forms, Lists, Planner, and To Do are all included, which is why E3 is often described as a “full toolbox” rather than a single app.

The security half adds Entra ID P1 for conditional access and self-service password reset, Intune Plan 1 for mobile device and app management, and Azure Information Protection Plan 1 for document classification and encryption. Starting July 1, 2026, Microsoft is adding Defender for Office 365 Plan 1 and Intune Plan 2 to E3 at no extra cost, which is how Microsoft justifies the $3 per user per month price hike.

The Windows half gives each licensed user the right to run Windows 11 Enterprise on up to five devices, along with the Windows Autopatch service and Windows Autopilot provisioning. That Windows entitlement is one of the biggest reasons U.S. enterprises pick E3 over Business Premium, because Business Premium does not include a Windows upgrade license.

Which Teams Features Ship With E3

When you buy the “with Teams” version of Microsoft 365 E3, you get Microsoft Teams Enterprise baked in. That covers one-to-one and group chat, channels, file sharing, online meetings for up to 1,000 interactive attendees, view-only meetings up to 20,000 attendees, screen sharing, background blur, noise suppression, breakout rooms, Together mode, and meeting recording with transcription stored in OneDrive.

Teams Rooms Basic is included for up to 25 rooms per tenant, which is enough for most mid-market customers, and webinars with registration pages and reporting are part of the suite. Live events in Teams continue to be supported during the transition window, with Microsoft steering customers toward Teams Town Hall per the Town Hall documentation.

What E3 does not include is Teams Phone and Audio Conferencing as standalone calling plans. To place or receive external phone calls through Teams, an E3 customer must add Teams Phone Standard at $8.00 per user per month, or move up to Microsoft 365 E5, which includes Teams Phone. The consequence of missing this detail is a failed call-center rollout, which has tripped up many U.S. school districts and city governments that assumed “Teams is in E3” meant “phone calls are in E3.”

A common misconception is that Copilot for Microsoft 365 is part of E3. It is not. Microsoft 365 Copilot is a separate $30 per user per month add-on that requires an eligible base license like E3, E5, or Business Standard, and July 2026 brings free Copilot Chat to E3 but not the paid per-user Copilot tied to Word, Excel, and Outlook.

The Teams Unbundling Story and Why It Matters in 2026

Before 2023, Microsoft bundled Teams into every Microsoft 365 and Office 365 enterprise suite, and customers could not buy the suite without Teams. The Slack antitrust complaint filed with the European Commission in July 2020 argued this practice abused Microsoft’s dominance in office productivity software, which triggered a formal EU investigation in July 2023.

Microsoft’s first response in October 2023 was to unbundle Teams only in the European Economic Area and Switzerland, but the Commission issued a Statement of Objections in June 2024 saying that was not enough. In April 2024, Microsoft extended the unbundling globally, creating the “no Teams” SKUs we see today, and the governing rule was Article 102 TFEU, which forbids abuse of a dominant market position.

On September 12, 2025, the European Commission accepted Microsoft’s binding commitments, closing the case without a formal finding of infringement. The commitments run for seven years for the suite-pricing obligations and ten years for the interoperability obligations, and the consequence of breach would be fines of up to 10% of Microsoft’s annual global turnover under Article 23 of Regulation 1/2003.

A real-world example of why this matters to a U.S. buyer is Marcus Hale, a CFO at a 400-seat manufacturer in Ohio. Marcus has no European operations, but he still gets the lower “no Teams” SKU price and the recurring right to switch, because Microsoft chose to extend the commitments globally rather than run two licensing systems. The common misconception is that this unbundling only applies to EU customers, and the reality is the SKUs are available worldwide.

U.S. Antitrust Angles

U.S. federal antitrust law rests on Section 2 of the Sherman Act, which forbids monopolization, and Section 5 of the FTC Act, which bans unfair methods of competition. The Department of Justice Antitrust Division and the Federal Trade Commission share jurisdiction over tech bundling cases, and both have studied Microsoft’s cloud practices in ongoing FTC 6(b) inquiries into cloud computing.

The consequence for a U.S. business buyer is that Microsoft’s EU commitments created the SKUs, but U.S. antitrust risk keeps those SKUs on offer. If Microsoft were to quietly raise the “no Teams” price so high that the discount disappeared, the FTC could open its own tying investigation under the Sherman and FTC Acts, which is one reason Microsoft published explicit price deltas in its November 2025 announcement.

State attorneys general can also sue under state antitrust statutes, such as New York’s Donnelly Act and California’s Cartwright Act. A real example is the multistate 2023 settlement with Google over app-store practices, which shows state AGs will act on bundling even when federal agencies hesitate, and the misconception that “only the EU cares” is dangerous for any Microsoft reseller operating in the U.S.

The Four Binding Commitments

The commitments Microsoft made are four promises with teeth. First, Microsoft must offer Office 365 and Microsoft 365 enterprise and business suites without Teams at an “appreciably lower price,” which is why Microsoft 365 E3 (no Teams) sits $8.55 below the with-Teams SKU today.

Second, Microsoft must give customers recurring opportunities to switch from a with-Teams to a no-Teams suite, even inside a multi-year Enterprise Agreement. Third, Microsoft must preserve interoperability between competing collaboration tools and Microsoft products like Outlook, SharePoint, and OneDrive, including documented APIs that rivals like Slack and Zoom can call.

Fourth, Microsoft must let users export their Teams messaging data in a format that rival apps can ingest, which addresses data-portability concerns under the EU Data Act. The consequence of missing any of these four duties is monitoring by a trustee and potential daily penalty payments, and the common misconception is that commitments are “voluntary” when in fact Article 9 decisions under Regulation 1/2003 are legally binding.

Price Math: E3 With Teams vs. E3 Without Teams

Pricing is where most U.S. renewal conversations live or die. The November 1, 2025 Microsoft announcement set the current list prices, and the December 4, 2025 announcement set the July 1, 2026 increases. Both numbers matter because most EA customers sign three-year deals that straddle the July 2026 uplift.

Here is the current list-price picture for the U.S. commercial channel. These are per-user-per-month prices on an annual commitment, and Cloud Solution Provider (CSP) partners typically sell at similar or slightly discounted rates depending on volume.

The math trap is obvious once you stack the numbers. Today, E3 (no Teams) at $27.45 plus Teams Enterprise at $5.25 equals $32.70, which is $3.30 cheaper than E3 with Teams at $36.00. After July 1, 2026, E3 (no Teams) at $30.45 plus Teams Enterprise at $8.55 equals $39.00, which exactly matches E3 with Teams.

The consequence is that the “unbundle and re-add Teams” arbitrage closes on July 1, 2026. After that date, there is no money saved by separating Teams unless you genuinely do not need it. A common misconception is that buying “no Teams” is always cheaper, and the reality is the discount only exists if you actually drop Teams use.

Scenario Tables for Three Common Buying Patterns

The three most popular 2026 buying patterns each have different cost and risk profiles. These scenario tables show the buyer action on the left and the downstream license or dollar result on the right, so procurement teams can model the decision before they sign.

Named-Person Examples That Show the Trade-offs

Real decisions become clear through real people. The three examples below are composite but realistic, and they mirror what U.S. resellers saw in Q1 2026 renewal cycles, based on channel commentary in the Directions on Microsoft research blog.

Dana Whitfield runs IT for a 250-person architecture firm in Austin. Her users live in Microsoft Teams all day for project huddles and client review calls. Dana picks Microsoft 365 E3 with Teams at $36.00 per user per month, signs a three-year EA in May 2026 to lock pre-July pricing, and saves $9,000 per year compared with waiting until July. Her consequence if she picked “no Teams” and added Teams Enterprise separately would be identical cost today but messier license management in the admin center.

Jorge Medina is a CFO at a 600-seat engineering company in Denver that standardized on Slack in 2019. Jorge picks Microsoft 365 E3 (no Teams) at $27.45 per user per month, saving $61,560 per year compared with the with-Teams SKU. His consequence is that any employee who needs to join a customer Teams call can still do so as a guest for free, per the Teams guest access documentation, without holding a Teams license.

Sam Chen is an MSP owner in Seattle who resells Microsoft licenses to 40 small-business clients. Sam standardizes his clients on Microsoft 365 Business Premium at $22.00 per user per month, but for clients with more than 300 users he must move to E3. Sam’s consequence in 2026 is that he must re-paper every renewal with an explicit “Teams or no Teams” election, per the CSP program rules, or risk a compliance flag on his Microsoft Partner account.

Mistakes to Avoid on E3 Renewals

The most expensive errors in 2026 are boring, paperwork-level mistakes rather than strategy errors. Each mistake below has a direct negative consequence that shows up in either the monthly invoice or the user help desk queue.

• Assuming Microsoft 365 E3 (no Teams) blocks Teams at the tenant level; the admin center documentation confirms Teams stays tenant-available, and users can still be guests, which surprises security teams that expected a hard cutoff.
• Signing a three-year EA for E3 (no Teams) and forgetting to budget the Teams Enterprise add-on; the result is a surprise $8.55 per user per month line item after July 1, 2026.
• Missing the March 31, 2026 renewal deadline for price protection on legacy pricing, which forces you onto new-list pricing a quarter early.
• Mixing EEA and non-EEA SKUs in one tenant; the EEA SKUs are legally restricted to European Economic Area legal entities, and an audit finding under the Microsoft Product Terms can force a true-up.
• Forgetting that Teams Phone is not in E3 or E3 (no Teams); the consequence is a project manager who promises phone replacement to the CFO and then discovers a $8.00 per user per month surprise.
• Treating Copilot for Microsoft 365 as “included” in E3; it is a separate $30.00 per user per month add-on per the Copilot licensing page.
• Ignoring the recurring switch right in the EU commitments; customers who forget they can switch mid-term end up paying with-Teams pricing for users who never open Teams, which wastes budget that could fund Copilot.
• Confusing Microsoft 365 E3 with Office 365 E3; the Office SKU lacks Windows 11 Enterprise and EMS, which is a meaningful gap for device-heavy U.S. businesses.
• Buying E5 “just to get Teams Phone” for a small group; it is almost always cheaper to stay on E3 and add Teams Phone standalone for the small group per the Teams Phone page.

Do’s and Don’ts for E3 Buyers in 2026

Rules of thumb save real money when the renewal clock is ticking. Each item below pairs a recommended action with the reasoning that makes it hold up under CFO scrutiny.

• Do run a Teams usage report in the Microsoft 365 admin center before renewal, because usage data is the only defensible way to pick “with Teams” vs. “no Teams.”
• Do negotiate price protection into any EA signed between April and June 2026, because the July 1 increase is a known event and your Microsoft account team expects the ask.
• Do document the recurring switch right in your contract notes, because the EU commitments entitle you to switch even inside a multi-year EA.
• Do map every user to a single SKU, because mixed-SKU tenants create reporting headaches and license-assignment errors.
• Do review Teams Room device counts against the 25-room Teams Rooms Basic limit, because exceeding it quietly pushes you toward Teams Rooms Pro at $40 per room per month per Teams Rooms licensing.
• Don’t assume reseller quotes reflect the Microsoft list price; always cross-check against the official Microsoft pricing page.
• Don’t let a three-year EA commit you to with-Teams SKUs if 30% or more of users do not use Teams monthly; the math almost never supports it.
• Don’t buy Teams Enterprise standalone for more than 60% of your base, because at that point the with-Teams SKU is cheaper or equal after July 2026.
• Don’t forget to decommission old Skype for Business Server deployments before renewal, because Microsoft ended Skype for Business Online support in 2021 and on-prem Skype support is also winding down.
• Don’t sign before you have a written statement of the July 2026 features Microsoft is adding to E3, because Defender for Office 365 P1 and Intune P2 materially change the security posture.

Pros and Cons of Each E3 Path

The final decision usually lives on a one-page pros-and-cons sheet. This list captures the points that actually change the answer for U.S. buyers.

• Pro of E3 with Teams: single SKU to manage, no add-on SKU to track, clean license assignment in the admin center.
• Pro of E3 with Teams: zero risk of user confusion when Teams is their daily driver, which lowers help-desk ticket volume.
• Pro of E3 with Teams: consistent experience across acquisitions, because new subsidiaries drop into the same SKU.
• Pro of E3 with Teams: no renegotiation needed when usage grows, because Teams Enterprise is already inside.
• Pro of E3 with Teams: qualifies for the same Copilot add-on path as E3 (no Teams).
• Con of E3 with Teams: $8.55 per user per month premium over E3 (no Teams) today, which adds up at scale.
• Con of E3 with Teams: pays for Teams even for users who never open it, which is hard to defend in a usage audit.
• Pro of E3 (no Teams): immediate 23% discount off the with-Teams SKU today per the Microsoft licensing news.
• Pro of E3 (no Teams): fits Slack- or Zoom-standardized shops without forcing a license you will not use.
• Pro of E3 (no Teams): preserves optionality, because Teams Enterprise can be added any month on a CSP subscription.
• Con of E3 (no Teams): two SKUs to manage if you later add Teams, which doubles license-assignment work.
• Con of E3 (no Teams): the arbitrage vanishes on July 1, 2026 once standalone Teams rises to $8.55.
• Con of E3 (no Teams): user confusion when someone expects Teams and the client will not activate.

How to Actually Buy, Switch, or Mix Licenses

The buying process matters as much as the SKU choice. Microsoft sells E3 through three channels, each with its own rules and consequences.

The first channel is the Enterprise Agreement, reserved for customers with 500 or more users, with a three-year commitment and annual true-ups. The second channel is the Microsoft Customer Agreement for Enterprise (MCA-E), which is the modern replacement and allows more flexible term lengths. The third channel is the Cloud Solution Provider program, where a reseller like Sam Chen from the example above owns the billing relationship.

The switching procedure is straightforward on paper. In the Microsoft 365 admin center, a global admin goes to Billing, then Your products, selects the subscription, and chooses “Change license.” For EA customers, the switch must be papered through the Microsoft account team and the partner of record, with the change taking effect at the next anniversary unless the commitments clause is invoked.

The consequence of picking the wrong channel is a loss of price protection. EA customers are locked to list prices for three years, which is a benefit when prices rise like the July 2026 uplift, and a downside when Microsoft cuts prices mid-term, which did happen in November 2025 for the no-Teams SKUs.

Teams Add-On Mechanics

Buying Teams Enterprise standalone is mechanically identical to buying any other Microsoft 365 SKU. The admin purchases seats, assigns them to users, and the Teams client activates on next sign-in. The Teams Enterprise page documents the current feature parity, which matches what “with Teams” E3 users get.

The consequence of adding Teams Enterprise to an E3 (no Teams) base is that you now have two SKUs on each user’s license card, which increases the risk of partial assignments. A partial assignment happens when a user has E3 (no Teams) but not Teams Enterprise, which results in a working Office install but a broken Teams client.

A common misconception is that Teams guest access requires a license. It does not. Per the Microsoft guest access documentation, a user in any tenant can join another tenant’s Teams meetings as a guest without holding a Teams license of their own, which means Jorge Medina’s Slack-first engineering firm can still collaborate with customers who live in Teams.

The Recurring Switch Right

The EU commitments include a promise that customers can switch from a with-Teams SKU to a no-Teams SKU at multiple points during the contract. This “recurring opportunity” language is documented in the September 2025 commitment text, and Microsoft’s contracting team has extended the mechanics globally.

The mechanics matter. A customer on a three-year EA signed in January 2026 can request a switch at each anniversary, and the request cannot be denied on the grounds of “you are locked into with-Teams.” The consequence of missing this right is overpayment, and the common misconception is that EA terms override the commitments, which is false for European customers and usually false in practice for U.S. customers because Microsoft chose to honor the switch globally.

Imagine Elena Kowalski, a procurement manager at a 3,000-seat bank in New Jersey. Elena signed an EA in 2024 when only with-Teams SKUs existed, but she realized in 2026 that 800 of her 3,000 users never opened Teams. She invokes the switch right, moves those 800 users to Microsoft 365 E3 (no Teams), and saves $82,080 per year from that one change.

Comparison With Other Microsoft 365 SKUs

E3 is not the only path, and the right SKU depends on seat count and feature needs. This comparison shows how E3 sits against its closest neighbors in the 2026 catalog.

The 300-user boundary is a hard Microsoft rule, not a guideline. Per the Business plans licensing documentation, once a tenant exceeds 300 users on any Business SKU, renewal forces a move to Enterprise SKUs, and the consequence of missing the cap is a failed renewal and a scramble to re-license.

FAQs

Is Microsoft Teams included in Microsoft 365 E3?

Yes, the standard Microsoft 365 E3 license includes Microsoft Teams Enterprise with chat, meetings, channels, and Teams Rooms Basic for up to 25 rooms per tenant.

Can I buy Microsoft 365 E3 without Teams?

Yes, Microsoft sells Microsoft 365 E3 (no Teams) worldwide at $27.45 per user per month through June 30, 2026, then $30.45 per user per month starting July 1, 2026.

Does Microsoft 365 E3 include Teams Phone?

No, Teams Phone is not part of E3 and requires either the $8.00 per user per month Teams Phone Standard add-on or an upgrade to Microsoft 365 E5.

Is Copilot for Microsoft 365 included in E3?

No, Copilot is a separate $30.00 per user per month add-on that requires an eligible base license such as E3, and only Copilot Chat becomes free with E3 starting July 2026.

Are the “no Teams” SKUs cheaper than buying Teams separately?

Yes, until July 1, 2026, when E3 (no Teams) plus Teams Enterprise equals the same $39.00 per user per month as E3 with Teams, ending the arbitrage.

Do I need the EEA version of the no-Teams SKU in the U.S.?

No, U.S. customers use the standard Microsoft 365 E3 (no Teams) SKU, because the EEA variant is legally restricted to European Economic Area legal entities.

Can users still join Teams meetings if my tenant has E3 (no Teams)?

Yes, they can join external Teams meetings as guests without a Teams license, per Microsoft’s guest access rules, though they cannot host meetings from their own tenant.

Did the EU antitrust case fine Microsoft?

No, the European Commission accepted binding commitments on September 12, 2025, closing the case without a formal finding of infringement or a fine.

Can I switch from E3 with Teams to E3 no Teams mid-contract?

Yes, the EU commitments require Microsoft to offer recurring switch opportunities, and Microsoft extended this right globally, so even U.S. EA customers can switch at anniversaries.

Will Microsoft 365 E3 price go up in 2026?

Yes, Microsoft announced on December 4, 2025 that E3 rises from $36.00 to $39.00 per user per month on July 1, 2026, citing added Defender, Intune, and Copilot Chat features.

Is Teams Rooms included in E3?

Yes, Teams Rooms Basic is included for up to 25 rooms per tenant, and rooms beyond that cap require the Teams Rooms Pro SKU at $40.00 per room per month.

Does Microsoft 365 E3 replace Skype for Business?

Yes, Microsoft retired Skype for Business Online in July 2021, and Teams inside E3 is the successor product for chat, meetings, and voice within the Microsoft stack.