Slack surprised Microsoft with a competition complaint in Europe yesterday. After arguing for months that Microsoft Teams is not a true competitor to Slack and more akin to Zoom, Slack finally admitted what was clear from the start: Microsoft Teams is a competitor and Slack struggles to compete. with Microsoft. It’s not a surprising admission, but if Slack struggles to compete with Microsoft, it will face even bigger headaches once Google finally gets it right. After years of researching communication apps, there are early signs that Google is now ready to take on Slack, Microsoft Teams, and Zoom.
Google’s corporate game has huge implications for Slack’s antitrust offering to the EU – and the company’s future beyond. Slack is set to face two giant tech companies that are leveraging their dominant products to take a significant share of the workplace communications industry. If Slack is successful in convincing the EU to take action against Microsoft’s bundle, it still faces the looming threat of Google bundling its own apps and services in the same fashion. And for antitrust crusaders, G Suite shows the bundling issue to be much bigger than Microsoft.
Slack’s competition complaint, released yesterday, targets Microsoft only and focuses on bundling the company’s Teams with its Office 365 subscription. “What we are asking is that the teams be separated from the Office suite. and sold separately with a fair trade price associated with it so that it competes on merit with our product, ”said David Schellhase, legal officer for Slack, in a call with reporters yesterday. “It really is that simple and straightforward.”
Microsoft has bundled a variety of productivity apps with its Office suite for decades, and chose to bundle Teams for free to Office 365 customers when it launched in 2016. This bundle, coupled with tight Office integration, has made it difficult for Slack to convince businesses that already pay Office to pay extra for Slack.
But Google seems ready to replicate this tactic. G Suite, which includes regular Gmail users, surpassed 2 billion active users earlier this year, and new G Suite boss Javier Soltero said at the time that “changing the way people work is something for which we are particularly well placed ”.
Soltero arrived at Google recently after a four-year career at Microsoft, a company he originally joined when the software giant acquired Accompli, which later became Outlook for iOS. He has already demonstrated his expertise in spotting trends and filling gaps with applications and services good enough for Microsoft to acquire. If it can repeat it at Google, then Slack has another giant competitor ready to bundle and leverage its popular communications and productivity apps.
Google has already shown signs of catching up with Zoom, Microsoft Teams, and Slack. Google made Meet free earlier this year to try to compete with Zoom’s sudden popularity, and it has started to deeply integrate the video conferencing app into Gmail and Google Calendar. The next step towards real competition between Slack and Teams is Google’s early work to integrate Google Chat, Rooms, and Meet into Gmail. It won’t happen until later this year, but it’s clearly a big priority at Google.
If Google can really run here and provide a more cohesive communications platform that merges emails, chats, and video calls into one experience, then this is as big a threat to Slack as it is to Microsoft Teams. .
Slack didn’t have a good answer to the looming threat from Google, and why Google’s bundling approach is less of a threat than Microsoft’s. “Google and Microsoft are different,” Schellhase says, responding to a question about why Microsoft’s work with Teams is different from Google’s recent approach. “Microsoft occupies a dominant position with the Office productivity suite and all supporting software. There is no law against dominance, but there are laws on how companies that hold dominant market share should behave. One thing they can’t do is tie a new independent product to the dominant product they have. “
If you look at the raw numbers between the reach or dominance of Google and Microsoft, Office is used by about 1.2 billion people, and Google says G Suite is used by 2 billion. The main difference between these numbers is that the vast majority of people who use Office use it as part of a work license or subscription, while the overwhelming majority of what Google calls G Suite users. are the roughly 1.5 billion Gmail users who are unlikely to be. Not everyone uses the service for work. So far, Google hasn’t focused on leveraging those free users into corporate clients – but when it starts, it could become a major player overnight.
Microsoft dominates the workplace with Office, but Google clearly dominates consumer use of email, search, and services like YouTube. Google’s free services are also used for work. This is especially true in education, where G Suite and Chromebooks continue to take over classrooms in the United States. Google’s ability to bundle and integrate Meet free with Gmail should still be a concern for Slack, even if the company isn’t ready to admit it or fight it just yet.
It’s still unclear whether the European Commission will even formally investigate Slack’s complaint. We probably have months of uncertainty until a decision is made, and these are key months ahead for Microsoft, Google, Slack, Zoom, and many more fighting for the way businesses and students communicate.
“We have seen two years of digital transformation in two months,” Microsoft CEO Satya Nadella said in April. Businesses have flocked to services like Microsoft Teams and Zoom during the pandemic. While Microsoft Teams overtook Slack usage with 13 million daily users a year ago, that wasn’t enough to spark a complaint with the EU. It’s clear that the digital transformation that businesses are forced to accelerate during this pandemic has pushed a lot more towards Microsoft Teams instead of Slack.
Microsoft Teams usage has skyrocketed almost 40% in one week at the start of the pandemic, from 32 million to 44 million. That change hasn’t slowed down either, with Microsoft revealing in April that Teams now has 75 million daily active users. Slack said it has broken user records due to increased demand for remote work, but the company has only reported 12.5 million concurrent Slack users so far. This number is also different from the 12 million daily active users that Slack already disclosed in October.
Microsoft responded to Slack’s complaint to the EU, and the company took the opportunity to highlight an area it says Slack has been missing: video conferencing. While Slack supports video conferencing, Microsoft says, “With COVID-19, the market has adopted Teams in record numbers while Slack has suffered from its lack of video conferencing.” Slack’s video conferencing is way inferior to Teams, and that’s the main reason Slack has partnered with Amazon to switch to Chime for voice and video calling.
Slack’s lack of reliable video calling and video conferencing highlights one of the main differences between Microsoft Teams and Slack. Microsoft has leveraged its investments in Lync and Skype and integrated them into Teams & Chat, while Slack has brilliantly adapted IRC for the workplace and has the ambition to truly eliminate business email.
The differences between Slack and Teams have allowed the two to compete against each other for different customers, especially as Microsoft caters to the Office and Slack crowd for a combination of G Suite, Zoom, and other tools. However, Google occupies an important place. Google Meet’s closer integration into Gmail touches on a weakness of Slack, and if Google is able to produce a compelling Slack competitor, then Slack will face much bigger problems than Microsoft alone.