Private channel vs shared channel vs a separate team

What it does

The structural choice when a subset of people (or people from another team or organisation) need their own space: a private channel inside the existing team, a shared channel that people can join without joining the team, or a whole new team with its own Microsoft 365 group.

Key facts

Private channel membership is a subset of the parent team. Guests can be members. Each private channel gets its own SharePoint site that only channel members can access — not parent team owners or admins unless they're also members.
Shared channel members can be added without being added to the team, and a shared channel can be shared with up to 50 other teams. External people join through Entra B2B direct connect, not as guests — guests can't be added to shared channels.
B2B direct connect needs cross-tenant access settings configured in Entra ID by both organisations.
Only team owners can create shared channels by default; team owners and members can create private channels by default. Both are controllable by channel policy.
A team can have up to 1,000 channels of any mix (deleted channels count for 30 days). Private channels moved into that limit from the old 30-per-team cap.
Private and shared channels each support up to 5,000 members; a shared channel's 5,000 includes up to 50 teams, each counting as one.
Private channels now support channel meetings; shared channels support scheduled meetings.
Feature gaps: private and shared channels don't support Planner, bots/connectors/messaging extensions or moderation. Private channels also don't support Forms or Stream tabs.
Channel type can't be converted after creation.
Private channel compliance copies now go to the group mailbox rather than individual members' mailboxes.

When to use / skip

Default to a standard channel and permissions you already have. Most "we need a private channel" requests are really "we need a folder with different permissions", and a private channel is a heavy way to get that — a whole extra SharePoint site, no Planner, no apps.

Use a private channel when a genuinely confidential conversation and its files belong to the same team's work: the leadership subset of a project team, an HR casework channel inside the HR team, a commercial channel in a bid team. The test is whether the private bit would make no sense outside the parent team. Use a shared channel when the people involved cross team or organisation boundaries — a joint project with a partner, a cross-department working group, a supplier channel. It's the right answer for B2B collaboration where you don't want guest accounts sprawling across your directory, provided both tenants will configure B2B direct connect.

Create a separate team when the group has its own lifecycle, its own owners, needs apps, Planner or bots, or will outlive the parent team. A team is also the right answer when the private channel would have most of the team's members in it anyway — at that point you've just built a second team with worse features.

Configuration decisions

Who can create private and shared channels: everyone, owners only, or nobody without a request. Set via channel policies.
Whether users can share channels externally, and whether they can join external shared channels — separate settings in the channel policy.
B2B direct connect posture: which partner tenants are allowed in cross-tenant access settings, inbound and outbound.
Guest access vs B2B direct connect for external collaboration: shared channels use direct connect; if partners won't configure it, you're back to guests in a standard or private channel.
Retention, sensitivity labels and eDiscovery coverage for the extra SharePoint sites that private and shared channels create.
Naming and ownership: who owns each private or shared channel when its creator leaves.

Gotchas

Team owners can't see inside private channels they aren't members of. Neither can SharePoint admins through the Teams UI. People are surprised by that at audit time.
Removing someone from the team removes them from all its private channels, and adding them back doesn't restore channel membership. Rebuild it manually.
Guests can't join shared channels at all. A partner with existing guest accounts in your tenant needs B2B direct connect instead, and their admins have to agree.
You can't convert a private channel to standard, or a standard to shared. Pick right first time or migrate content by hand.
Bots, connectors and messaging extensions don't work in private or shared channels. A team built around a Workflows bot loses it in the new channel.
Every private and shared channel spins up a SharePoint site that lives outside the team site's permissions. Site-level policies and backups need to account for them.

Consultant notes

Put a one-page decision tree in the client's governance guide. It stops the ten-private-channels-per-team habit before it starts.
For B2B shared channels, get the cross-tenant access settings agreed with the partner's admins at kickoff. It's the usual blocker, and it's an admin-to-admin conversation.
Audit existing private channels before raising the creation policy — the old 30-per-team cap kept sprawl in check, and that brake is gone.
If the client uses information barriers or strict retention, test private and shared channel behaviour in their tenant before promising anything.

Revisit when Microsoft closes more of the private/shared channel feature gaps, especially apps and Planner support