Cloud wars heat up as Salesforce zeros in on Slack

'This deal would be a major shot across the bow at Microsoft'

The battle for dominance in cloud-based communication systems, increasingly critical as more Americans work remotely, is heating up amid reports is in advanced talks to buy workspace-messaging platform Slack Technologies.

A deal, expected Tuesday, according to CNBC, would give Salesforce a direct competitor to Microsoft Teams, which has struggled to grow amid intense competition from Slack.

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“This deal would be a major shot across the bow at Microsoft,” wrote Dan Ives, a New York-based analyst at Wedbush Securities, noting that a tie-up would create a “two-horse race” over the next decade in the trillion-dollar cloud opportunity.

The deal, which would value Slack at more than $17 billion, according to The Wall Street Journal, would be Salesforce’s biggest acquisition ever. Slack’s market capitalization has soared to $19.4 billion, a sign that investors believe a bidding war could ensue.


A Slack acquisition would be the latest in a flurry of deals made by Salesforce as it looks to strengthen its foothold in the cloud space.

The enterprise software provider in June 2019 purchased data-visualization company Tableau Software for $15.7 billion. A year earlier, Salesforce bought cloud application provider Mulesoft for $6.5 billion. Salesforce's previous purchases of collaboration tools Chatter and Quip failed to gain traction.

Competition between Salesforce and Microsoft has been heating up for years, ever since Salesforce CEO Marc Benioff rejected Microsoft’s $55 billion takeover bid.

A year later, Microsoft beat out Salesforce for the business professional social media site LinkedIn, securing a $27 billion deal.

Nabbing Slack would serve as a bit of revenge for Salesforce as Microsoft in 2016 failed to secure an $8 billion deal for the company. Microsoft then launched its Teams product.

While comparisons between Slack and Microsoft Teams are inevitable, Slack CEO Stuart Butterfield in July told FOX Business’ Liz Claman that the two platforms are “fundamentally different” and that most customers use them alongside one another. Slack is focused on messaging while Microsoft Teams is more of a video-conferencing tool.

Regardless, a deal would put pressure on the rest of the industry, including Google and Amazon, to keep up, according to Ives.


“We believe the software landscape is ripe for major M&A and if Salesforce does head down this path it would set off a chain reaction for more cloud software deals in 2021 despite the run-up in valuations over the past nine months," Ives said.