Facebook will remove the free tier for its Workplace enterprise social network and encourage users to upgrade to paid versions — or switch to its consumer services.
Facebook launched Workplace in 2016 and has attracted 5 million paid users, according to data from May, up from 3 million in October 2019, though there is no information available on the number of free users. Workplace has proved popular among enterprise customers, with large organizations such as Nestle and Telefonica deploying the app company-wide.
Facebook introduced the Workplace Essential tier last year as part of a revamp of its pricing, though it has provided a free version of the application since launch. The Essential tier offers limited functionality and storage space, for example, with additional features such as single sign-on and analytics available in Advanced and Enterprise products.
Businesses using Workplace Essential will be given until Feb. 10 to upgrade to a paid tier or migrate their data off the platform.
Those that plan to leave Workplace can find advice on downloading their data at the Workplace Help Center. Facebook said it’s encouraging Essentials customers to upgrade to a paid Workplace plan or adopt Facebook Groups and WhatsApp for communication and collaboration needs. There are now 20 million people using Groups for work purposes, the company said.
There are no planned changes to the paid tiers, a spokesperson said, and Facebook will continue to offer the application to education and non-profit organizations for free. Facebook’s Advanced tier costs $4 per user each month, while the Enterprise tier is $8 per user per month. The company also offers a free, 30-day trial for the Advanced tier for users who want to try it out. (More detailed pricing information is available here.)
By ending support for the Essential tier, the company said it can allocate engineering resources to focus more on building features for its paid services, such as video, remote presence and employee well-being. That’s designed to help broaden Workplace’s focus from community building to wider collaboration and productivity uses, a spokesperson said.
Although plans were already in place to retire Workplace Essential, the decision to retire the free tier was pushed forward after the Eureopean Union’s introduction of new privacy rules, the company said. The company cited the European Electronic Communications Code and the Directive on Privacy and Electronic Communications (also known as the ePrivacy Directive).
The roll out of those regulations will mean that certain messaging features in Workplace Essential will be unavailable by the end of the year, Facebook said.
“The timing of this decision was partially influenced by some new privacy rules that are coming into effect in Europe, which would have made some of our messaging features unavailable in our free tier,” the spokesperson said.
In order to adhere to the privacy rules, Facebook said it would have had to remove its Workplace Messaging service, called Workplace Chat, from Essential. A spokesperson added that additional security features including SSO within the paid Advanced tier means that the messaging service will be unaffected.
Analysts see the removal of the free tier as allowing Facebook to refocus on adding new features. It also implies an evolution of Workplace’s customer strategy, increasing its focus on selling directly to senior executives, such as heads of HR or CIOs, rather than encouraging adoption among smaller pockets of teams.
The move comes at a time when the overall collaboration market is hot, spurred by the ongoing COVID-19 pandemic and the remote work boom. Numerous companies are competing to get their software on corporate desktops, from Slack — which is being acquired by Salesforce in a $27.7 billion deal — to Microsoft (with Teams), Google (with Workspace), Cisco and others.
“While I am never a fan of removing a free option, Workplace from Facebook may be forced to do that to meet upcoming privacy regulations while expanding functionality,” said Wayne Kurtzman, a research director at IDC. “They are not ending their Workplace for Good program, which is a relief to many NGOs on the platform.”
He added that the change could help Facebook add features at a faster clip as it competes in the fast-moving collaboration software market. “I think they’re positioning to support more aggressive expansion of their product in 2021,” said Kurtzman.
Free tiers are common among cloud collaboration and productivity tools, with the likes of Slack, Trello and Dropbox benefitting from viral adoption within organizations, a “bottom-up” approach that involves employees selecting digital tools rather than those mandated by IT. The idea is that a proportion of unpaid users will be converted to paid services over time.
However, maintaining a free tier entails overhead, such as hosting and management costs, and it’s clear that Facebook didn’t see this as a viable strategy in the long term.
“When the platform was launched, the fact that it was available as a free tool was a real boost for Facebook in terms of getting Workplace into the market,” said Angela Ashenden, a principal analyst at CCS Insight. “Organizations could play around with it to understand how it could help them; that really catapulted them into the market.
“In practice, they probably had a lot of organizations that were using the free tier who never intended to move into the paid tier, so that gives them no value,” she said.
While the decision may make sense in terms of resource allocation, there are downsides for Workplace, because costs could be a barrier for smaller businesses interested in testing out the platform.
For existing Workplace Essential users, the decision could impact their willingness to migrate to the paid option.
“For those organizations that were using the free version that are then pushed to upgrade to a paid version or towards WhatsApp and or Facebook Groups, that could have a negative affect on their trust in Facebook as a supplier,” said Ashenden.