Slack surprised Microsoft with a competition complaint in Europe yesterday. After arguing for months that Microsoft Teams isn’t a true competitor to Slack and is more akin to Zoom, Slack finally admitted what was clear all along: Microsoft Teams is a competitor, and Slack is finding it hard to compete with Microsoft. It’s not a surprising admission, but if Slack is finding it hard to compete with Microsoft, then it’s going to face even greater headaches once Google finally gets its act together. After fumbling with communications apps for years, there are early signs that Google is now ready to take on Slack, Microsoft Teams, and Zoom.
Google’s enterprise play has huge implications for Slack’s EU antitrust bid — and the company’s future beyond it. Slack looks set to face two giant tech companies leveraging their dominant products to take a big slices of the workplace communications business. If Slack manages to convince the EU to take action against Microsoft’s bundling, it still faces the looming threat of Google bundling its own apps and services in a similar way. And for antitrust crusaders, G Suite shows that the bundling problem is much bigger than Microsoft.
Slack’s competition complaint, published yesterday, is targeted solely at Microsoft and focused on the company’s bundling of Teams with its Office 365 subscription. “What we’re asking for is that Teams be separated from the Office suite and be sold separately with a fair commercial price tag associated with it so it competes on the merit with our product,” explained David Schellhase, Slack’s legal chief, in a call with reporters yesterday. “It really is as simple and straightforward as that.”
Slack for IPhone.
Microsoft has bundled a variety of productivity apps with its Office suite for decades, and it chose to bundle Teams free to Office 365 customers when it launched back in 2016. This bundling, alongside tight Office integration, has made it hard for Slack to convince businesses that are already paying for Office to pay extra to get Slack.
But Google looks set to replicate that tactic. G Suite, which includes regular Gmail users, passed 2 billion active users earlier this year, and G Suite’s new boss, Javier Soltero, said at the time that “changing the way people work is something we are uniquely positioned to do.”
Soltero arrived at Google recently after a four-year career at Microsoft, a company he joined originally when the software giant acquired Accompli, which later became Outlook for iOS. He’s already demonstrated his expertise for spotting trends and filling the gaps with apps and services that were good enough for Microsoft to acquire. If he can repeat this at Google, then Slack has another giant competitor ready to bundle and leverage its popular communications and productivity apps.
Google has already shown signs it’s moving toward 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 integrating the videoconferencing app deeply into Gmail and Google Calendar. The next step toward true Slack and Teams competition is Google’s early work toward integrating Google Chat, Rooms, and Meet into Gmail. This won’t arrive until later this year, but it’s clearly a big priority at Google.
Google Meet Gmail integration.
If Google can truly execute here and provide a more coherent communications platform that merges email, chat, and video calls into a single experience, then that’s as big a threat to Slack as well as Microsoft Teams.
Slack didn’t have a good answer to the looming threat of Google, and why Google’s bundling approach is less of a threat than Microsoft’s. “Google and Microsoft are different,” says Schellhase, responding to a question about why Microsoft’s work with Teams is different from Google’s recent approach. “Microsoft has a dominant position with the Office productivity suite and all of the ancillary software. There’s no law against having a dominant position, but there are laws about how companies that have dominant market share have to behave. One thing they cannot do is tie a new independent product to the dominant product that they’ve got.”
If you look at the raw numbers between Google and Microsoft’s reach or dominance, Office is used by around 1.2 billion people, and Google says G Suite is used by 2 billion. The key difference between these numbers is that the vast majority of people who are using Office are using it as part of a work license or subscription, whereas the overwhelming majority of what Google calls G Suite users are the approximately 1.5 billion Gmail users who probably aren’t all using the service for work. So far, Google hasn’t focused on leveraging those free users into enterprise clients — but when it starts, it could become a major player overnight.
Microsoft dominates the workplace with Office, but Google clearly dominates consumer usage of email, search, and with services like YouTube. Google’s free services are used for work, too. This is especially true in education, where G Suite and Chromebooks continue to take over classrooms across the US. Google’s ability to bundle and integrate Meet free with Gmail should still be a cause for concern for Slack, even if the company isn’t willing to admit that or fight that battle just yet.
It’s still not clear whether the European Commission will even formally investigate Slack’s complaint. We likely have months of uncertainty until a decision is made, and these are keys months ahead for Microsoft, Google, Slack, Zoom, and many others fighting for how businesses and students communicate.
“We’ve seen two years’ worth of digital transformation in two months,” said Microsoft CEO Satya Nadella back in April. Businesses have been flocking 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 prompt an EU complaint. It’s clear that the digital transformation that businesses are being forced to accelerate during this pandemic has pushed many more to Microsoft Teams instead of Slack.
Microsoft Teams usage skyrocketed nearly 40 percent in a single week at the beginning of the pandemic, moving from 32 million to 44 million. That shift hasn’t slowed down either, with Microsoft revealing back in April that Teams is now at 75 million daily active users. Slack has said it has broken user records due to increased demand for remote working, but the company has only said 12.5 million concurrent Slack users so far. That number is also different from the 12 million daily active users Slack previously disclosed back in October.
Microsoft has responded to Slack’s EU complaint, and the company used the opportunity to highlight an area it feels Slack missed out on: videoconferencing. While Slack does actually support videoconferencing, Microsoft says, “With COVID-19, the market has embraced Teams in record numbers while Slack suffered from its absence of video-conferencing.” Slack’s videoconferencing is far inferior to Teams, and it’s the big reason behind Slack partnering up with Amazon to transition to Chime for voice and video calling.
Slack’s miss on reliable video calling and videoconferencing highlights one of the main differences between Microsoft Teams and Slack. Microsoft has leveraged its investments in Lync and Skype and rolled them into Teams and chat, while Slack has brilliantly adapted IRC for the workplace and has ambitions to truly eliminate business email.
The differences between Slack and Teams have allowed both to compete for different customers, especially as Microsoft caters to the Office crowd and Slack for a combination of G Suite, Zoom, and other tools. Google is looming large, though. The tighter integration of Google Meet into Gmail hits at a Slack weakness, and if Google is able to produce a compelling Slack competitor, then Slack will face far bigger problems than Microsoft alone.