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In Challenge to Microsoft, Salesforce Acquires Slack for $27 Billion

Salesforce has announced its intent to acquire Slack for an estimated $27.7 billion in a deal that would fuse two of Microsoft's biggest rivals in the business applications space.

Salesforce offers a hosted customer relationship management (CRM) service for organizations to facilitate marketing and business operations. With the acquisition, Salesforce is planning to add Slack to its Salesforce Cloud operations. Specifically, Slack will serve as "the new interface for Salesforce Customer 360," the announcement explained.

The integration will create an "operating system for the new way to work," with Slack bringing an open platform that works with "more than 2,400 apps."

"Together, Salesforce and Slack will create the most extensive open ecosystem of apps and workflows for business and empower millions of developers to build the next generation of apps, with clicks not code," the announcement indicated.

Salesforce and Slack can be thought of as natural allies in that both have Microsoft as a major competitor. At times, they've pushed back verbally at inroads made by Microsoft into their product areas, with the Microsoft Dynamics CRM and Microsoft Teams offerings.

The announcement's emphasis on offering an open platform for independent software vendors is perhaps notable. Microsoft recently played with the notion of charging for application programming interface use, particularly in respect to Teams software connections.

Both Salesforce and Slack this week reported their fiscal third quarter (Q3) earnings. Salesforce reported overall revenue of $5.42 billion, up 20 percent compared with last year's Q3 result, per a press release.

Using non-GAAP measures, Slack reported net income of $4.6 million for the quarter, which was an upward trend in a year of quarterly net-income losses, per an "Earnings Deck" document (PDF). Butterfield described Slack's Q3 paid growth as being "up 140% from the same quarter last year." The revenue increase for Slack was largely attributed to the work-from-home trend, per a press release.

The deal, pending regulatory approvals, is expected to close in Salesforce's second quarter of its fiscal-year 2022. At close, Slack will become a Salesforce operating unit, headed by Slack CEO Stewart Butterfield.

"Personally, I believe this is the most strategic combination in the history of software, and I can't wait to get going," Butterfield said in a released statement.

About the Author

Kurt Mackie is senior news producer for 1105 Media's Converge360 group.

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