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Here's how acquiring Slack may help Salesforce compete with Microsoft

The Salesforce-Slack deal, one of the largest transactions in the software industry, will also help Salesforce gain muscle to fight its competitor Microsoft

December 05, 2020 / 10:13 AM IST

Cloud software giant Salesforce on December 1 said it would acquire chat software developer Slack for over $27 billion, a move that would help the former cash in on the surge in remote working.

The transaction, one of the largest in the software industry, will also help Salesforce gain muscle to fight its competitor Microsoft.

"Slack changes everything and makes Salesforce a whole new type of company," Marc Benioff, CEO of Salesforce, told CNBC.

In a statement released by Saleforce, Benioff called the deal a "match made in heaven".

Also read: Slack is to Salesforce what Pixar was to Disney

Workplace messaging app Slack has over 12 million daily active users (DAU), as against Microsoft Teams' 115 million.

"This would be a game changer move for Benioff & Co to further build out its collaboration engine and product footprint as cloud spending ramps up across the enterprise," Wedbush Securities' Dan Ives told CNBC last week before the deal was announced.

Competition with Microsoft

Both Microsoft Teams and Slack have made efforts to capitalise on the spike in remote working due to the COVID-19 pandemic.

Slack, founded in 2009, made its stock market debut in June 2019. Since then, Slack has struggled to compete with Teams, which has been aggressively promoted by the software giant.

Interestingly, some media reports suggest Microsoft had weighed a buyout of Slack in 2016.

In July 2020, Slack even filed an antitrust complaint in the European Union (EU) against Microsoft, alleging that the bundling of Teams within Office 365 software was an "illegal and anti-competitive practice".

In the antitrust complaint, Slack said the software giant was "abusing its market dominance".

“Our primary competitor is currently Microsoft,” Slack said when it sought to become a public company in 2019. Microsoft has a large customer base that it has been able to convert to Teams, and Salesforce could give Slack a similar benefit.

Moneycontrol News
first published: Dec 2, 2020 04:28 pm