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Microsoft bails on $8 million bid for Slack – here’s why

March 5, 2016 By Sam Catherman

Microsoft bails on $8 million bid for Slack – here’s why

The company decided not to move forward with purchasing Slack, a popular enterprise messaging service.

Popular messaging service Slack had caught the eye of Microsoft executives, but a recent report from Tech Crunch indicates that the deal will remain dead in its tracks. Sources indicate that instead of acquiring Slack and its team, Microsoft will focus on adding new features to their own messaging service, Skype.

Microsoft had been eyeing the startup for quite some time, and rumors indicated that a plan to purchase the company for $8 billion was in motion. Apparently, Microsoft’s top level execs including co-founder Bill Gates and CEO Satya Nadella were not moved by the idea. Gates himself pushed for the further development of Skype, hoping to make it more competitive with Slack.

Slack has been doing quite well for itself in the past year or so. They currently have 2.3 million daily active users, 675,000 of which pay a subscription fee to use the service. Slack’s focus on allowing enterprises and organizations effectively communicate across multiple channels has made them a favorite across numerous industries, and the company is currently weighing as many as 10 different acquisition offers.

Leading the charge behind the potential Slack acquisition at Microsoft was Qi Lu, an executive that oversees all productivity, communications, education, search and information services at Microsoft. He has overseen numerous projects for the company, including managing Microsoft Office, Office 365, SharePoint, Exchange, Yammer, Lync, Skype, Bing, Bing Apps, MSN, and Advertising.

Slack was valued at $2.8 billion after its last round of funding in April 2015, which brought in $160 million for the company. Analysts familiar with the company believe that Slack is preparing for another round of funding, which could raise their valuation as high as $5 billion.

Will Microsoft benefit by passing up the opportunity to acquire Slack? They have been a player in the enterprise communications field for quite a while, but haven’t made nearly as many waves as Slack has. Microsoft may one day come to regret passing up this deal if they can’t figure out how to bring Skype to dominance in the market.

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