To state the obvious: t his is a major moment for the enterprise software landscape, and importantly the best-of-breed software ecosystem. Notably, despite how Slack’s situation demonstrates Microsoft’s unchecked power in the enterprise market, Microsoft has not been part of the many antitrust hearings happening on Capitol Hill.Salesforce officially announced the intent to acquire Slack today.
However, while American lawmakers quibble about perceived anti-political bias during antitrust hearings, our regulators continue to approve huge acquisitions, showing that they won’t protect our free market from its true threat: an untouchable degree of power that is enshrined in the massive amounts of money, customer relationships, and workforce labor these companies have amassed over time. The last few years have shown a remarkable bipartisan interest in curbing the overwhelming power of big tech companies, even leading to calls to break them up. Facebook’s acquisition of Instagram now forms the basis of a new antitrust inquiry from dozens of states and federal regulators, announced yesterday. As Instagram became more and more beloved by users, alleged threats of Mark Zuckerberg’s desire to “destroy” the app grew stronger. Private conversations between Instagram cofounder Kevin Systrom and investor Matt Cohler show the predatory relationship between tech giant executives and upstart rivals. Instagram is perhaps the most famous example of this. When startups begin to gain traction in an area the giants perceive as a threat to their business, vindictive firms with huge coffers target them to stop them becoming future competitors of significance. There are so many horror stories of businesses suffering from this monopolistic power disparity. In order to keep pace with Microsoft, Slack needed a bigger enterprise sales team, which they found in tech giant Salesforce, leading to an acquisition I’m quite sure was bittersweet. In a society with functional antitrust laws, such activity would be illegal.” This practice landed the company in trouble with federal antitrust regulators in the 1990s, and Microsoft has deployed the same playbook here as well-leading to Slack’s antitrust complaint against Microsoft in the EU earlier this year.īut Slack’s leaders must have decided that the courts wouldn’t be able to act quickly enough, and instead planned to save the company another way. In those same four years where Slack’s user base tripled, Microsoft Teams claims it gained 115 million users, showing the world that product quality can’t save a startup when Big Tech wants a piece.Īs Matt Stoller notes in his newsletter “ BIG“, Microsoft has a track record of giving “away its new product for no or low cost to existing clients, and it with existing product lines. In 2016, Microsoft, which already had the customer base and sales force to conquer the market, decided to essentially copy Slack and make it free by bundling it with the Microsoft professional suite. The simple “emoji react” options we see now on Facebook posts, Twitter DMs, and even Microsoft Teams can all trace their lineage to this impactful design change. By focusing on the user experience, and offering intuitive design, Slack helped change the paradigm of chat. Becoming a Slack user after the desert that was Microsoft Outlook was like a fresh drink of water after a long drought. How could Slack, as “just another messenger app,” raise hundreds of millions of dollars when its product had no real way to defend itself against Big Tech? But using Slack made me a believer. I’ll never forget the shock I felt reading fundraising headlines in the 2010s. And if a company like Slack can’t stand up to the consolidation of corporate power, consumers’ ability to freely choose the best and most useful product is at risk. Even Slack, which built an incredibly powerful product and operated with notorious efficiency, could not stay independent in a match-up against Microsoft. These giants, armed with nearly limitless funds and extensive client relationships, frequently abuse their advantage and bully smaller upstarts into oblivion. Slack is but one of many stories in Silicon Valley of a “defensive” acquisition, where a company is no longer able to compete independently against the tech giants.
But Slack’s decision to be acquired by Salesforce indicates that today, the exact opposite is true. Our free market trades on the assumption that good, innovative products will prevail over less effective ones released by entrenched firms like Microsoft.
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