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Why Was Microsoft Interested in Slack?

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Nov. 20 2020, Updated 4:23 p.m. ET

Microsoft was considering Slack

Leading technology players seem to be trying to outdo each other with acquisitions so far in 2016. IBM (IBM) has been actively following its acquisition strategy in 2016. Microsoft (MSFT), not to be left behind, is on the same path.

On March 4, 2016, TechCrunch stated that Microsoft was considering Slack as a potential buyout target for as much as $8 billion. Slack is currently looking for funding of approximately $150 million–$300 million to raise its valuation to $3.5 million–$4 billion, according to Bloomberg.

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Microsoft already integrated Skype and Slack

Slack provides text and video messaging, enterprise messaging, and collaboration apps and services that enable users to communicate with each other. It also has file sharing features and is integrated with various apps. Statistic Brain Research Institute estimates that Slack has approximately 2.3 million users. About 700,000 of them are paying users, as you can see in the above graph. Slack hopes to have more than $64 million in annual recurring revenues.

In January 2016, before any acquisition talks, Microsoft partnered with Slack to integrate Skype and Slack. The integration makes it possible for Skype voice and video calls to be launched from Slack. In February 2016, Microsoft also announced that Skype calls would be available on Google’s (GOOG) (GOOGL) Android and Apple’s (AAPL) iOS.

In March 2016, Slack announced new voice and video services. Slack caught Microsoft’s attention since Slack operates in the enterprise collaboration space where Skype operates.

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