Monetization Opportunities Open Up for Teams App Developers

And Create a Potential Headache for Some Microsoft 365 Tenants

270 million monthly active users make the Microsoft Teams installed base an attractive target for app developers. In some cases, developers only want to allow users access to their application through a channel tab or installed app. The majority of the more than 1,500 apps available in the Teams app store fall into this category.

Microsoft announced the capability to monetize Teams apps at Build 2021 and made the functionality available to developers in October 2021. Since then, a trickle of apps seeking to offer paid-for services by selling licenses through Teams has emerged. Yesterday, I counted 29 apps offering licenses for purchases in the Teams admin center (Figure 1).

Teams apps with purchase options
Figure 1: Teams apps with purchase options

Licenses and Pricing

I couldn’t find a public API to explore the contents of the Teams app store to investigate apps with purchase options. Neither the Get-TeamsApp cmdlet nor the Graph List teamsApp API returned the full set of apps shown in the Teams admin center, and the information returned for apps doesn’t include details like pricing plans.

Selecting an app reveals details of license pricing and options (Figure 2). Some of the apps offered free try-before-you-buy licenses with the opportunity to upgrade to a full version. Others were apps targeting specific user groups (like lawyers) and come with a hefty per-user monthly or annual cost. Manually checking the 29 apps showed that all offered admin-driven purchases. In other words, a Teams or tenant administrator must purchase licenses and then assign the licenses to users. I didn’t find any app that supported in-app purchases.

License details for a Teams app
Figure 2: License details for a Teams app

App properties also show the level of Microsoft 365 certification achieved by the app publisher. Although it’s not mandatory for publishers to submit apps which support license purchases through the Microsoft 365 certification process, I think it’s better if they do. Certification requires publishers to pay attention to the privacy of user data and explain how they use that data. Only four of the 29 apps had the highest level of app certification.

Controlling Apps

Administrators can control the apps available to users through app permission policies. Before people can use an app, an administrator must allow access to the app, with or without user requests. This model works well when apps require paid-for licenses. However, it’s not so good when in-app purchases are involved. The same process to allow users to access the apps through permission policies is used, but once people have access, there’s no central billing or reporting mechanism. At least, I see no mention of anything but a transaction between app and user in Microsoft’s documentation. Perhaps I am missing something.

There’s certainly a case to argue that IT should get out of the way and allow users to decide what apps they want to use. People can account for their purchases through normal organizational expense procedures and don’t need IT oversight to block the relatively small expenditure on apps that only a couple of people might ever use.

If that’s your belief, the advent of in-app purchases in Teams won’t be a problem. The argument against allowing this to happen is that it’s another form of shadow IT that help desks and other support staff will be expected to manage and debug when things go wrong. It’s hard to refuse to have anything to do with an app when you know nothing about it.

The Question of Compliance

Compliance is a concern with any third-party app, not just those offering paid-for services. Tenant administrators might have no idea where apps store their data, and no idea what kind of data people use with an app. One thing’s for sure: the app data will be invisible to Microsoft 365 eDiscovery and compliance functionality, and probably invisible to any other data governance functionality used by the organization. On the other hand, the app could be so valuable that its use is an acceptable trade-off.

The growing number of Teams apps proves the attractiveness of the platform. Some additional insight into what apps do might make tenants happier to approve their use, and help ISVs achieve the kind of monetization opportunities offered by Microsoft. In the meantime, license management and in-app purchases are additional factors for administrators to consider when they decide to authorize the use of apps.

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