Slack is already going after Microsoft in Europe, hoping to put a dent in the latter’s success with Teams. But Windows could be what really puts Slack in the rearview mirror.
When Microsoft rolled out Teams, its work collaboration software, in 2017, it took dead aim at Slack, the reigning king of work collaboration tools. The first Teams iteration was not particularly noteworthy, and Slack was clearly superior. One big drawback in those early days was that Teams, surprisingly, didn’t work well with Office.
Microsoft, relentless as ever, doggedly improved Teams with each new version and within a few years, it worked hand-in-glove with Office. And now Teams and Slack are locked in a war for the massive and growing market for enterprise collaborative tools.
The pandemic has made that market far more lucrative than it otherwise would have been. We’re now in a remote, work-at-home world that’s not going away. “More than one-third of firms that had employees switch to remote work believe that it will remain more common at their company even after the COVID-19 crisis ends,” a Harvard Business School report found. “These estimates suggest that at least 16% of American workers will switch from professional offices to working at home at least two days per week as a result of COVID-19. That would represent a dramatic and persistent shift in workplace norms around remote work.”
Jared Spataro, head of Microsoft 365, said the same thing after the initial pandemic lockdowns in the US: “It’s clear to me there will be a new normal… The new normal is not going to be like what I thought two weeks ago: that all is clear, go back everybody. There will be a new normal that will require us to continue to use these new tools for a long time.”
So much is at stake that the war has gotten increasingly nasty. Last summer, Slack filed an anti-trust suit against Microsoft with the European Commission, claiming that Microsoft was using its Office suite dominance to illegally squeeze out Slack.
“Microsoft is reverting to past behavior,” Slack general counsel David Schellhase argued. “It 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.’
Slack is asking the European Commission to take swift action to ensure Microsoft cannot continue to illegally leverage its power from one market to another by bundling or tying products.”
But asking the European Commission for “swift action” is a fool’s errand. Expect it to happen, if it ever does, sometime around the twelfth of never.
Slack knows that. And it sees Teams gobbling up increasing market share. Slack recently said it has a little more than 10 million daily users. Teams is leaving it in the dust. As Computerworld reported in December: “Teams, available at no extra cost to Office 365 subscribers, has 115 million daily active users, with adoption soaring during the pandemic and workforce lockdown that followed. Slack’s growth this year has been perceived as lackluster in comparison.”
Making matters worse is that Slack has yet to turn a profit, while Microsoft is immensely profitable, with a net worth north of $1 trillion, and $137 billion sitting around in cash.
So Slack, a 99-pound weakling compared to the brawny Microsoft, looked for a saviorand found one: Salesforce, which in early December agreed to buy the company for $27.7 billion.
Salesforce is no 99-pound weakling. It may not be as large as Microsoft, but it’s valued at $220 billion and dominates the CRM market, which gives it entrée into the world’s largest and most successful companies.
Daniel Newman, principal analyst at Futurum Research, thinks the company has a chance of beating Microsoft in this market. “You have a product in Slack that people love, but which hasn’t been marketed well. Salesforce and Benioff can give it faster growth and extract untapped potential. Excuse the buzzword, but maybe this is really one of those synergy moments.”
Microsoft, though, may have the weapon it needs to beat Salesforce in collaboration software: Windows. The company says it has well more than 1 billion active Windows users. What if Microsoft included a free starter version of Teams in Windows, with a license for a limited number of people? They could then upsell people to paid versions of Teams, or paid versions of Office 365 which includes Teams. It would be tough for Salesforce to compete.
You might think that Microsoft Satya Nadella wouldn’t do that, for fear of providing more evidence of antitrust behavior. But that kind of aggressive behavior is built into Microsoft’s DNA. Satya Nadella may not be the shark that past CEOs Bill Gates and Steve Ballmer were. But he’s plenty tough when the occasion calls for it.
Here’s what he recently said to Bloomberg about the Slack antitrust suit: “Would Slack have even existed if it was not for the free access they had on top of, say, the Windows platform? They didn’t have to call Microsoft. They didn’t have to go through any of our app stores. They didn’t need any of our permission compared to any of the other platforms that they’re available on. We perhaps provide the most open platform in Windows and even in Office 365.”
And just in case anyone missed the point he was making, he added, “Big by itself is not bad.” In other words, when it comes to antitrust suit over Slack, he was effectively saying said: Bring it on.
There’s no guarantee Microsoft will include Teams in Windows. But it wouldn’t surprise me if the company did. And it wouldn’t surprise me if it worked.
This article originally appeared on ComputerWorld.