The acquisition of Slack has left many surprised.
The popular workplace messaging app Slack recently sold its business to the software giant Salesforce for a whopping $27.7 billion.
But, what made them make the move when Slack’s CEO Stewart Butterfield repeatedly made it clear that he had no intention of selling the company at all?
Let’s find out.
According to Wedbush Securities’ analyst Dan Ives, the deal was a classic example of how small software firms stand little to no chance in front of industry giants. In this case, the giant being the Redmond-based Microsoft.
Initially, Slack attracted massive success, but slowly it started turning out an uphill battle against Microsoft to acquire more enterprise-level clients.
Back in 2016, the Redmond-based tech giant itself was looking into buying Slack for a measly $8 billion. However, the deal never came to fruition. After that, Microsoft ended up launching Teams in 2017 and began promoting it aggressively.
Slack seeing how they came into direct competition with Microsoft Teams; they fully embraced the challenge by publishing a full-page ad in the New York Times to welcome their newly launched rival.
But over time, what began as a healthy rivalry turned heavily toxic. Slack’s CEO Butterfield, in a statement once said that Microsoft perhaps is becoming way too preoccupied with killing them and that Teams was the vehicle to do that.
To that, Microsoft’s Vice President Jared Spataro said that Slack lacked the “breadth and depth” to reinvent work and put out a press release announcing how Teams had officially surpassed Slack in daily users.
Fast forward to July 2020, Slack filed an antitrust complaint against Microsoft with European Commission stating that the later started bundling Teams with their Office suite which is, in turn, helping them unfairly grow during the pandemic.
By this time, Microsoft Teams reached a whopping 115 million daily users, 10x times more than what Slack had in total. The independent workplace messaging app firm complained that Microsoft’s bundling tactic was illegal and pointed fingers at how earlier when they did the same with Internet Explorer and Windows operating system, Microsoft landed in a massive antitrust investigation back in 2001.
Come September; Slack started fearing retaliation from Microsoft as the company wrote in their recent 10-Q filing that they could be subjected to adverse measures from Microsoft, their employees, or agents in response to the complaint they filed with European Commission. And, in less than three months later, Slack sold itself to Salesforce.
So, did Slack hung up its armour and accepted defeat against the tech mammoth Microsft? Well, not quite. Now that Slack has been acquired by Salesforce, it will enjoy better footing to compete against Teams. Also, Salesforce being a software major as well, one must note that they can apply the same tactics Microsoft did to grow Teams within the short period of 3 years.
But that’s not all; the jaw-dropping price Slack is sold at is another highlight that is attracting the eyeballs. Had Slack would have given in and sold to Microsoft 4 years before, they would take home only $8 billion as opposed to more than tripling the acquisition value they have attained now. Thus, this is another massive win for Slack and all of its stakeholders and investors.
However, this could just be the beginning of Slack 2.0 and it would be interesting to see what strategies Slack will employ by taking the advantage of the massive reach of Salesforce among enterprise customers to give Microsoft the taste of their own medicine.
What’s your take on the acquisition of Slack by Salesforce? Do let us know your views in the comment section below.