It was only five years ago that Salesforce was almost acquired by Microsoft. In 2015, CNBC reported that Microsoft offered as much as $55 billion to buy out the SaaS giant, though Chief Executive Officer Marc Benioff wanted as much as $70 billion. Talks fell through after hitting cost roadblocks.
Now Salesforce has acquired chat app, Slack in what has been dubbed a $27.7 billion “megadeal.” So, what’s this got to do with Microsoft? Since Slack already competes with Microsoft Teams, now Salesforce has become the tech giant’s biggest competitor.
This all came to a head during the lockdown caused by the COVID-19 pandemic, as Microsoft went head to head with Slack to enable remote collaboration through communications tools.
“This is a match made in heaven,” Benioff said in a statement. “Together, Salesforce and Slack will shape the future of enterprise software and transform the way everyone works in the all-digital, work-from-anywhere world.”
The acquisition announced is by far the largest in the 21-year history of Salesforce. The San Francisco company was one of the first to begin selling software as a subscription service that could be used on any internet-connected device instead of the more cumbersome process of installing the programs on individual computers.
“As software plays a more and more critical role in the performance of every organization, we share a vision of reduced complexity, increased power and flexibility, and ultimately a greater degree of alignment and organizational agility,” said Stewart Butterfield, CEO of Slack in a statement. “Personally, I believe this is the most strategic combination in the history of software, and I can’t wait to get going.”
In July, Slack filed a complaint in the European Union accusing Microsoft of illegally bundling Teams into Office 365, essentially blocking its removal by customers who may prefer Slack. This complaint followed the company losing around 40% of its value since it went public in April 2019.
Despite Slack’s uninspiring public valuation, Benioff and Butterfield are confident in the new partnership.
In fact, according to The New York Times, during a 30-minute interview after announcing the Slack deal and Salesforce’s earnings, Benioff rejected all opportunities to talk about his history with Microsoft or even acknowledge its existence. “What’s that company?” he said. “How do you spell it?”