Microsoft Clarifies How It Plans to Charge for APIs

Pay as You Go Model for Microsoft 365 APIs

Microsoft 365 APIs

About fifteen months ago, Microsoft introduced the notion of metered APIs where those who consumed the APIs would pay for the resources they consume. The pay-as-you-go (PAYG) model evolved further in July 2022 when Microsoft started to push ISVs to use the new Teams export API instead of Exchange Web Services (EWS) for their backup products. The Teams export API is a metered API and is likely to the test case to measure customer acceptance of the PAYG model.

So far, I haven’t heard many positive reactions to the development. Some wonder how Microsoft can force ISVs to use an API when they don’t know how high the charges metering will rack up. Others ask how Microsoft can introduce an export API for backup when they don’t have an equivalent import API to allow tenants to restore data to Teams. I don’t understand this either as it seems logical to introduce export and import capabilities at the same time. We live in interesting times!

PAYG with Syntex Backup

To be fair to Microsoft, they plan to go down the same PAYG route with the new backup service they plan to introduce in 2023 as part of the Syntex content management suite. Customers will have to use an Azure subscription to pay for backups of SharePoint Online, OneDrive for Business, and Exchange Online (so far, Microsoft is leaving Teams backup to ISVs).

All of which brings me to the December 2 post from the Microsoft Graph development team where Microsoft attempts to describe what they’re doing with different Microsoft 365 APIs. Like many Microsoft texts, too many words disguise the essential facts of the matter.

Three Microsoft 365 API Tiers

Essentially, Microsoft plans to operate three Microsoft 365 API tiers:

  • Standard: The regular Graph-based and other APIs that allow Microsoft 365 tenants to access and work with their data.
  • High-capacity: Metered APIs that deal with high-volume operations like the streaming of data out of Microsoft 365 for backups or the import of data into Microsoft 365.
  • Advanced: APIs developed by Microsoft to deliver new functionality. Microsoft points to Azure Communications Services as an example. These APIs allow developers to add the kind of communication options that are available in Teams to their applications.

My reading of the situation is that Microsoft won’t charge for standard APIs because this would interfere with customer access to their data. Microsoft says that standard APIs will remain the default endpoint.

However, Microsoft very much wants to charge for high-capacity APIs used by “business-critical applications with high usage patterns.” The logic here is that these APIs strain the resources available within the service. To ensure that Microsoft can meet customer expectations, they need to deploy more resources to meet the demand and someone’s got to pay for those resources. By using a PAYG model, Microsoft will charge for actual usage of resources.

Microsoft also wants customers to pay for advanced APIs. In effect, this is like an add-on license such as Teams Premium. If you want to use the bells and whistles enabled by an advanced API, you must pay for the privilege. It’s a reasonable stance.

Problem Areas for Microsoft 365 APIs

I don’t have a problem with applying a tiered model for APIs, especially if the default tier continues with free access. The first problem here is in communications, where Microsoft has failed to sell their approach to ISVs and tenants. The lack of clarity and obfuscation is staggering for an organization that employs masses of marketing and PR staff.

The second issue is the lack of data about how much PAYG is likely to cost. Few want to write an open-ended check to Microsoft for API usage. Microsoft is developing the model and understands how the APIs work, so it should be able to give indicative pricing for different scenarios. For instance, if I have 100 teams generating 35,000 new channel conversations and 70,000 chats monthly, how much will a backup cost? Or if my tenant generates new and updated documents at the typical rate observed by Microsoft across all tenants of a certain size, how much will a Syntex backup cost?

The last issue is the heavy-handed approach Microsoft has taken with backup ISVs. Being told that you must move from a working, well-sorted, and totally understood API to a new, untested, and metered API is not a recipe for good ISV relationships. Microsoft needs its ISVs to support its API tiered model. It would be so much better if a little less arrogance and a little more humility was obvious in communication. Just because you’re the big dog who owns the API bone doesn’t mean that you need to fight with anyone who wants a lick.

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3 Replies to “Microsoft Clarifies How It Plans to Charge for APIs”

  1. I don’t understand how the charges will be levied for this. If I am a CSP customer, I pay the reseller for licences to consume the O365 services. There is no metering anywhere. And if I am using a 3rd party backup solution, I pay them for the backup services. Can you advise how this usage would get charged back to the customer?

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