Salesforce, a business software giant, agreed to acquire workplace messaging app Slack for £20bn ($27.7bn) in what would be one of the largest tech mergers in the last few years. The founder, chairman, and CEO of the business software giant, Marc Benioff, called the agreement a match made in heaven. He is struggling to expand the software offerings of the company and offend off competitors such as Microsoft.
The purchase deal comes as the coronavirus pandemic increased the focus on remote work and tools such as Slack, which enable it. Dan Ives, the tech analyst of Wedbush Securities, called it a now or never acquisition for Benioff. After the deal’s announcement, Ives wrote in a note that if Salesforce wants to expand outside its core gold mine of marketing and sales departments. It was the time and thus signified a main shot across the bow against Microsoft.
In 2009, Slack won a big following with its group chats, which offer a substitute to email. When the company listed its shares sank openly in 2019, it valued at approximately $20bn. Whereas, its shares dropped after the launch and missed out on the stratospheric upsurge enjoyed by other technology companies this year.
Microsoft previously planned to buy Slack
The firm, which had almost 12.5 million users as of late March, now has over a hundred million users. Microsoft planned to acquire Slack four years ago. But for some reason, the deal never happened. Instead, Microsoft focused on developing its own platform, Microsoft Teams – a clear rival to Slack. When a trillion-dollar firm such as Microsoft looks to move into any business – the owners of those businesses should worry.
In the start, Slack confidently took the challenge, even publishing a full-page advertisement in the New York Times welcoming the competition in 2016. Big tech firms can kill smaller companies. Their complete size and supremacy in the market make them tough to compete with. Microsoft began flexing its muscle. It started bundling in ‘Microsoft Teams’ with its Office tool. Almost ten times more people are using Microsoft Teams than Slack.
Its legal challenges claim that Microsoft uses its supremacy to bully the competition unethically. Therefore, this acquisition deal should see in that scenario, whereas Slack squeezed slowly. Now a much bigger fish acquires Slack and would give a tough time to Microsoft.
Both these companies hope that the linkup will put them in a better place to take on several enterprise software competitors, and specifically Microsoft. The business applications of Microsoft experienced a huge surge as a big number of people shifted to work-from-home setups because of the COVID-19 pandemic.
The business suite of Microsoft has similar features as the messaging service of Slack. Satya Nadella, the CEO of Microsoft, remarked that they experienced two years’ worth of digital transformation in just two months. Both Slack and Salesforce had previous disagreements with Microsoft.v