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A Look at Facebook’s Workplace Standard

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Free Workplace software

Facebook (FB) is working on a free version of its office collaboration tool, Workplace, according to a CNBC report quoting the company’s product manager, Simon Cross. Workplace Premium was launched in October 2016 and costs between $1–$3 per user per month. 

The free version of the collaboration tool should be called Workplace Standard, and it would lack certain features available to Workplace Premium subscribers.

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What can Facebook achieve with Workplace Standard?

With Workplace Standard, Facebook (FB) appears to be betting that a free version of its collaboration tool would foster deeper engagement on its social site and draw more potential advertisers to the platform. The free Workplace tool is expected to appeal to small businesses with limited budgets, especially startups in emerging markets (EEM).

If a free version of Workplace brings more business users to Facebook, the company could encourage marketers to buy ads on its platform. This shift would allow the company to grow its advertising revenues at the expense of rivals such as Twitter (TWTR) and Google.

The free Workplace version could also help Facebook grow its overall subscriber base if business users who don’t already use Facebook end up registering for personal accounts. Facebook finished 4Q16 with ~1.9 billion active users after registering 70 million new users in that quarter. The chart above shows the company’s quarterly subscriber gains.

Upgrading the free users

Perhaps businesses that enter Workplace through the free version could also end up registering for a premium account. This move could allow Facebook to grow its subscription revenues and expand its share of the collaboration software market.

The company’s office collaboration competitors include Microsoft (MSFT), which launched Teams in 2016, and startup Slack. Slack recently teamed up with PayPal (PYPL) to allow its ~5 million daily active users send and receive payments within the software platform, which could increase the appeal of the collaboration tool.

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