Microsoft 365 price shock: Better quit vendor lock-in now!
Starting July 2026, Microsoft plans a huge price hike for Microsoft 365 of up to 16.7%. Time to look for replacements.
It’s fair to say that Microsoft’s plan for 2026 is a price explosion. Globally, Microsoft is raising the prices for its Microsoft 365 business and government subscriptions starting on July 1, 2026. According to Microsoft’s announcement, costs for small businesses and employees with Basic plans will increase by 16.7%, Business Standard by 12%, Enterprise E3 by 8.3%, and E5 by 5.3%. Microsoft justifies this price increase with rolling out its AI features to all users.
This increase is not an isolated event, but the final step of a systematic dependency strategy. The Big Tech is able to increase its prices because for decades companies and authorities relied on Microsoft’s products and have built their work processes around it. In addition, Microsoft has been systematically pushing its customers into the cloud, tightening dependencies, and through offering extensive bundles Microsoft is making every alternative more expensive.
Vendor lock-in fuels price increase
Microsoft knows about its strong market position and the high dependency of its customers. This enables the tech giant to push through bold changes such as ending the free Office offering for NPOs, or forcing Australians to upgrade to a higher plan with Copilot AI functions without transparently showing that users could stay on existing plans.
The strategy is clear: Microsoft wants - or needs to? - make more money off existing customers because with a market penetration of “90% of Fortune 500 companies”, according to the Microsoft FY26 First Quarter Earnings, the company is running out of options to grow. And growth is what shareholders are demanding. So buckle up, and get ready, because rest assured: This will not be the last price increase we see this decade.
Digital sovereignty for the rescue
These price increases by Microsoft, however, have another consequence as well. They incentivise customers and politics in Europe to keep pushing for digital sovereignty - which in fact is a trend sparked by Microsoft’s disabling of the email account of a European judge. While Microsoft and other US big techs now offer so called “sovereign clouds”, these offerings have long been unmasked as “sovereign washing”. Any US tech provider is subject to the US Cloud Act, which infringes data protection rights of European citizens and businesses.
But while Europe praises digital sovereignty, many believe that Microsoft’s market dominance makes switching impossible. Authorities, companies, and educational institutions are now part of a system that supposedly adapts to the Big Tech’s rules at will. At least, this is what Microsoft believes so the renewed price increases are the logical final step of a closed ecosystem that no longer hides its power, but uses it to increase its profits.
Choice is power
But several customers of Tuta Mail report that freeing themselves from Microsoft’s lock-in was the best decision they’ve made in a long time. Particularly when data protection and best security practices are important, Microsoft does not tick all required boxes. So while sending a secure email in Outlook is possible, it is rather complicated and not as simple as in Tuta Mail where you can easily send an end-to-end encrypted email to anyone. Tax lawyer Matthias Baenz says that “encrypted communication is not an optional extra, but a duty” and the IAGO GmbH reports that switching its Exchange server to Tuta Mail was great:
With Tuta, we have the great advantage of avoiding data redundancy and not having to rely on different systems all the time. Exchange is very much based on Outlook, for example, and when we still had it, Microsoft always tried to sneak its way into our work processes somehow. We’ve completely moved away from that now! At the same time, we have the ability to better detect spam and better organize folders. The overall feel of Tuta is significantly better and clearer than it was with Outlook.”
Customers do have a choice, not just when it comes to email, but also in regards to other products like office tools, video conferencing, and more. Europe, and in particular European institutions!, can no longer rely on a US corporation. Digital sovereignty remains a theoretical goal as long as central administrative and security infrastructures are effectively dependent on a single provider.
Open-source alternatives made in Europe exist – but they are given too little political priority, too little strategic support, and too little economic scale.
Microsoft is currently testing its customers’ pain threshold. But the problem is not the price. The problem is dependency and vendor lock-in.
Schleswig-Holstein chose Open Source & saves millions
The good news is: Change is possible, and no one must be scared of ditching Microsoft Office. Schleswig-Holstein, one of Germany’s states, successfully made the switch and just reported that after an investment of nine million euros in 2026, it will start saving 15 million euros each year now that it no longer has to pay high Microsoft license fees.
Germany and Europe as whole must take this success story as an example. One important first step would be to create alternative framework agreements with European providers. As it stands, German municipalities can easily book Microsoft Office via a German-wide framework agreement while booking European alternative to Microsoft Outlook such as Tuta Mail is much more complicated. This situation fuels Europe’s dependency on Microsoft and must be changed.
Microsoft’s security issues
And having a choice is not only good for the market and for getting better prices, it also enhances security. Microsoft has seen a lot of headwind for its weak security standards. In 2024, after it was reported that China successfully hacked Microsoft servers in 2023, the US government asked Microsoft to get its security right before adding new features, and the New Outlook has been heavily criticized for sending data, including passwords, to Microsoft servers.
In addition, the Austrian Data Protection Authority just published findings that Microsoft 365 Education uses student data for Microsoft’s own purposes, which is illegal. To date, Microsoft has not explained how exactly it uses student data, but it is obliged to do so now, and it will be pressured by NOYB. In Germany, the data protection authorities have already declared MS365 illegal for German schools as it does not comply with the GDPR.
Because of these issues, the Swiss government is advising individuals to move away from Microsoft 365 due to concerns over inadequate encryption. This recommendation highlights the importance of secure data handling and protection, particularly in Europe with its strict data protection regulations.
And it’s not just individuals. In fact, email encryption is even more important for companies. Now that Microsoft is introducing the highest price hike for small businesses - 16.7% - any small business that is serious about security should start looking for a new provider.
So let’s close this deep dive into Microsoft’s business practices and its security shortcomings with a quote by tax lawyer Matthias Baenz:
Encrypted communication is not an optional extra, but a duty.”
