Five reasons why an Amazon-Slack deal will make a lot of sense

Chat service Slack Technologies Inc startup is drawing interest as a potential takeover target from several buyers, including Amazon.com Inc., at a price of at least $9 billion, Bloomberg reported Wednesday. Buying Slack would be Amazon's biggest acquisition in its history.

By: Bloomberg | Updated: June 16, 2017 5:27 pm
Amazon, Amazon.com Inc., Amazon web services, chatbot, Slack, Slack Technologies Inc. slack chat services, slack acquisition deal, Slack Acquisition Buying Slack would be Amazon’s biggest acquisition in its history.

Any tech giant that sells enterprise software has reason to keep its eye on popular workplace chat service Slack Technologies Inc. And now the looks might be getting serious: the San Francisco startup is drawing interest as a potential takeover target from several buyers, including Amazon.com Inc., at a price of at least $9 billion, Bloomberg reported Wednesday.

At that price, buying Slack would be Amazon’s biggest acquisition — Slackquisition if you will — in its history. What would Amazon get for its carefully doled-out money? And why might Slack — which was last valued by investors at $3.8 billion — agree to sell? The attraction could be in workplace messaging and communication.

Alexa infiltrates the office: Amazon has been busy spreading its voice-activated Alexa platform to the masses. Echo speakers are now common in homes and hotel rooms, letting people check the weather, hail Ubers and dim lights by simply speaking to the device. Next, Alexa is coming to cars and will enable drivers to get directions and find restaurants via voice command. The workplace, Slack’s bread and butter, is the missing link. And Alexa has skills that would come in handy at work, like adding meetings to your calendar with your voice instead of your fingers or dictating a message to a colleague.

Enhancing the cloud: Amazon’s cloud computing division, Amazon Web Services, already dominates the market, helping companies save money on servers and IT departments by letting them host computing systems in Amazon data centers and access them via the internet. While it has the infrastructure, Amazon is working to develop more workplace tools available in the cloud to compete with Microsoft’s Office and Google’s G-Suite. Slack’s corporate chat functions and its integration with other services like Dropbox and Github could help Amazon narrow the feature gap with Microsoft Corp. and Alphabet Inc., and complement its other products such as Chime, an online video conferencing and file-sharing tool.

Amazon wants to sell you stuff at work, too: Amazon has a growing business-to-business marketplace, Amazon Business, that helps farmers order tractor parts, universities find lab equipment and office workers get bulk discounts on pens and sticky pads. The company wants to bring the digital retail shopping experience it pioneered to the workplace, where many orders are still done via phone and with paper forms. Slack offers a toehold in the workplace and a potential place to market any and all office needs. See reason No. 1: “Alexa, order sticky pads.”

Amazon lacks a robust messaging platform: Sure, Slack’s 5 million users are paltry compared with Facebook’s 1.2 billion Messenger users. But you have to start somewhere. As messaging continues to eat up more of mobile users’ time and attention, Slack could become Amazon’s ticket into owning a popular chatting platform. Slack users love the service — it’s often brought into companies from the ground up, via dedicated fans — and some even use it in their personal lives, to organize outings among groups of friends or for projects outside of work.

Slack wants access to big business: Since January, when Slack debuted a version of its service specifically for large enterprise, it’s been working to add bigger customers like IBM, which was an early tester and has 30,000 workers currently using Slack. But its strongest connection has usually been with small start-ups. Amazon could help Slack get access to larger companies already using AWS and Amazon’s other product offerings, much in the way that Microsoft offers its Teams product — the Slack competitor — for free to groups using Microsoft Office 365.

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