Rationale Behind Amazon’s Possible Acquisition Of Slack

by Sean Ogino |

Slack, the most popular enterprise communications platform, has always had moments of fame due to “who’s going to buy Slack” rumors. Last year, reports claimed that Microsoft was trying to scoop up Slack for a rumored amount, which could have been in the ballpark of $8 billion. It could have rivaled company’s some of the biggest acquisitions (like Skype for $8.5 billion). But the software giant decided to come up with its own competing messaging program, known as Microsoft Teams.

Slack is once again in a limelight for the same potential acquisition moment. According to Bloomberg, there are chances of Amazon’s possible acquisition of Slack. It is believed that the communications startup has received an unofficial buy-out interest from Amazon for a whopping price tag of $9 billion, which until just last week would be Amazon’s biggest acquisition ever.

As expected, many have failed to make sense of this possible move by Amazon, as Amazon and Slack represent fairly opposing identities. The former is known for its fanatic attention on efficiency and the latter focuses on a friendly workplace culture. As far as their products are concerned, Slack is more of a joy oriented entity, while Amazon is focused on just getting things done. The question, then, is where Slack could fit in.

A) Amazon Web Services (AWS):

In looking at Amazon’s recent moves, it’s evident that Amazon doesn’t want to leave any industry unexplored. Amazon is trying to get into the broader enterprise market through its hugely popular Amazon Web Services (AWS), which provides cloud infrastructure and hosting services. Initiatives such as data analytics services (QuickSight) and video conferencing services (Amazon Chime) have been implemented for the same reason.

Moreover, Slack has revamped itself by launching Enterprise Grid, a more powerful version intended to cater to larger organizations. The target audience of Enterprise Grid will overlap significantly with AWS’s target audience. It’s also possible that many of the potential Slack Enterprise Grid customers are already AWS customers. That’s where Amazon’s move to take over Slack in order to grow its portfolio of enterprise services makes very obvious sense; especially when we look at the already escalated competition between Microsoft Azure and Amazon AWS.

Amazon Web Services

B) Futuristic Acquisition Of Talent:

The entire world is aware of Amazon’s keen interest in voice-activated artificial intelligence. Its most talked about product Amazon Echo, which is looming over Times Square right now, can’t function without the voice recognition and natural language understanding. Slack already has Search, Learning, and Intelligence (SLI) team, whose primary task is to integrate such services with smarter features.

Besides, Slack is also equipped with voice and video calling. If this gets coupled with Amazon’s hardware ecosystem, it will give a certain mileage to Amazon’s Echo offerings. Amazon’s newest major Echo, the Show, is designed with an aim to add a graphical interface to Alexa. Of course, it also integrates features like video calling. This amalgamation of AI and voice control is presenting a potential alternative to the concept of personal assistance.

Undoubtedly, Amazon’s possible acquisition of Slack will add wings to the Amazon’s desire of becoming an all-encompassing store that has something for everyone. But it will be too early to say anything concretely at this point. The deal may go nowhere, as Slack has turned down many offers from heavyweights in the past in order to maintain its independence and sustainability. But Slack is facing challenges and circumstances that are different from the past. Slack knows very well that Microsoft Teams is going to be its biggest rival in the future. By selling itself to Amazon, it can earn a competitive shelter against a too real threat.

[White Paper]
[White Paper]