Teams vs. Slack: M&A and Competition Questions in the Collaboration Space
What role will enforcement play in the fragile digital market?
When it comes to companies offering workplace collaboration software platforms such as Microsoft Teams and Slack there is little in the way of collaboration.
The wave of technology solutions that enable groups to collaborate efficiently and creatively despite being dispersed around the planet, or forced by a pandemic into quarantine, is big business. Organizations are beginning to use them in market-facing applications, too, so the prospects are exciting and the race for market share is on.
Grandview Research put the 2019 global market at $9.5 billion while Statista, relying on data from Apps Run the World, put the figure at $12 billion, up from $7 billion in 2015. The market could swell to $14 billion in just a couple of years.
With so much opportunity comes mergers and acquisitions, questions about fair play, and government scrutiny.
Salesforce.com Inc., a popular cloud-based customer relationship software provider, announced in December that it would acquire Slack Technologies Inc., a leading business communication and collaboration platform that offers topical chat rooms and direct messaging. At $27.7 billion it would be Salesforce’s biggest acquisition yet.
But the Department of Justice Antitrust Division sent second requests for additional information to the companies, something Salesforce divulged in its Feb. 16 Form 8-K filed with the Securities & Exchange Commission.
Salesforce said it didn’t expect the second request to slow the deal down and was on track to close by the end of July. But last week the company said it doesn’t expect the deal to close until the second quarter of its fiscal year 2022.
Slack cries foul against Microsoft in Europe
Microsoft, which is embedded in organizations worldwide, competes with Slack via its popular Teams platform. Last year, Slack filed a competition complaint against Microsoft with the European Commission, claiming Microsoft is abusing its market dominance to extinguish competition by bundling or tying its products.
“Microsoft has illegally tied its Teams product into its market-dominant Office productivity suite, force installing it for millions, blocking its removal, and hiding the true cost to enterprise customers,” Slack said in a statement. “Microsoft is reverting to past behavior. They created a weak, copycat product and tied it to their dominant Office product, force installing it and blocking its removal, a carbon copy of their illegal behavior during the ‘browser wars.’”
At the time of the filing Microsoft said it looked forward to cooperating with the EC, adding: “We created Teams to combine the ability to collaborate with the ability to connect via video, because that’s what people want. With COVID-19, the market has embraced Teams in record numbers while Slack suffered from its absence of video-conferencing. We’re committed to offering customers not only the best of new innovation, but a wide variety of choice in how they purchase and use the product.”
Salesforce/Slack: What Market Observers Say
Salesforce is the leader in the customer relationship management space, but “is no longer the only company in its growing market,” according to U.S. News & World Report. It also faces competition from Microsoft, which has an advantage with businesses already using Office and Teams. Other competitors include: SAP; Oracle; Adobe; the fast-growing HubSpot platform; and Zendesk. According to CRM.org, Slack’s competitors, in addition to Teams, include Google Hangouts Chat, RocketChat, Glip, Discord, Flowdock, Chanty, Flock, Ryver, and Mattermost.
But some see the Salesforce/Slack combination a good move for the companies. “If Salesforce can leverage deep integrations with Slack to provide a next-generation cross-domain employee experience,” wrote John Case, CEO of Unify Square on Forbes.com, “Slack has the potential to become an absolute powerhouse in the collaboration world. But this is not a given—many challenges remain on both sides of the acquisition and must be overcome before this vision can become reality.”
Some also see this as a transition from software to platform solutions in this space, and a battle between Slack and Teams. But not Irwin Lazar, Principal at Metrigy, who told TechTarget.com he doesn’t see it that way. "I think there'll be use cases for Slack in addition to Microsoft. I think there's space for both."
The antitrust enforcement agencies have a new respect for the fragility of competition in digital markets, having already witnessed the monopolization of online advertising and social networking. Whether DOJ challenges the Salesforce/Slack deal will reveal a great deal about their view on the future of competition in this important sector of the online ecosystem.