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December 3, 2020

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Salesforce to buy Slack in software mega-deal

Business software pioneer Salesforce.com is buying work-chatting service Slack for US$27.7 billion in a deal aimed at giving the two companies a better shot at competing against longtime industry powerhouse Microsoft.

The acquisition announced on Tuesday 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.

Salesforce’s flamboyant founder and CEO Marc Benioff hailed the “cloud computing” concept as the wave of the future to much derision initially.

But software as a service has become an industry standard that has turned into a gold mine for longtime software makers. Microsoft for one has developed its own thriving online suite of services, known as Office 365, which includes a Teams chatting service that includes many of the same features as Slack’s 6-year-old application.

Slack in July filed a complaint in the European Union accusing Microsoft of illegally bundling Teams into Office 365 in a way that blocks its removal by customers who may prefer Slack.

Cloud wars

Microsoft also has been posing a threat to Salesforce’s main products, a line-up of tools that help other companies manage their customer relationships.

“For Benioff, this is all about Microsoft,” Wedbush Securities analyst Dan Ives said of the deal. “It’s just clear Microsoft is moving further and further away from Salesforce when it comes to the cloud wars.”

Benioff left no doubt he considered the deal to be a major coup, after losing out to Microsoft in 2016 when the two companies were both vying to buy the professional networking service LinkedIn.

“It’s a match made in heaven,” Benioff said during an ebullient conference call. “We see in Slack a once-in-a-generation company and platform. It’s a central nervous system for so many companies.”

Salesforce has been building on its success in recent years to diversify into other fields, largely through a series of acquisitions that included its previous largest deal, a US$15.7 billion purchase of data analytics specialist Tableau Software last year.




 

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