Slack and Amazon partner to take on Microsoft Teams

5 Jun 2020685 Views

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Slack has partnered with Amazon to improve video and voice calling offerings, while providing its messaging technology to Amazon employees.

On Thursday (4 June), Slack and Amazon announced that they have forged a multi-year agreement to provide communication tools to distributed teams. It will see Amazon employees switch to using messaging platform Slack, while Slack will migrate its voice and video calling functions to Amazon’s Chime communications platform.

Terms of the deal were not disclosed, however an SEC filing said that Slack will now pay Amazon Web Services (AWS) at least $425m over the next five years, which is up from a previous commitment of at least $250m to be paid by July 2023.

It is not known how many of Amazon’s 840,000 employees will use Slack, though the size of the company’s workforce makes it a significant deal. Amazon is currently the second-largest private-sector employer in the US.

Prior to this announcement, Slack’s largest customer was IBM, which has more than 350,000 employees.

Increased competition

The news comes at a time when there is increased demand for enterprise communications tools for remote teams.

CNBC noted that news of the deal emerged on the same day that Slack released its latest earnings report, which showed steady but not accelerated growth, despite the market opportunity created by the shift to remote working.

At the beginning of March, when many workers around the world left the office to work from home, video-conferencing tool Microsoft Teams saw usage increase by almost 40pc in a single week, reporting 44m daily active users. By the end of April, this increased to 75m daily active users.

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In a recent SEC filing, Slack said that the Microsoft Corporation is its “primary competitor”. Slack CEO Stewart Butterfield told CNBC last month that he doesn’t think Microsoft Teams is a competitor to Slack. However, in a later interview with the Verge, he said the company feels that “Microsoft is perhaps unhealthily preoccupied with killing us and Teams is the vehicle to do that”.

Commentators have now begun to speculate that the deal between Slack and Amazon could help the two companies take on Microsoft Teams.

Running Slack on AWS

As part of the deal, Slack will now use AWS as its preferred partner for storage, compute, database, security, analytics, machine learning and future collaboration features.

“Strategically partnering with AWS allows both companies to scale to meet demand and deliver enterprise-grade offerings to our customers,” Butterfield said in the announcement.

Slack’s vice-president of business and corporate development, Brad Armstrong, said that it is “not likely” that the company will use Azure in the future. Armstrong told the Verge: “We have not used Azure. The vast majority of our service has always run on AWS.”

By using Chime technology to run Slack’s video and voice call features, the company hopes to add new features. Armstrong said that the company is looking at bringing video calling to the mobile version of Slack, as it currently does not have this feature. He also said that Slack is looking into transcription.

Matt Garman, AWS’ vice-president for sales and marketing, added that Chime could benefit from Slack’s user interface (UI) alongside the Amazon product.

“We have a client UI. It’s nice, but it’s not Slack,” Garman said. “They’re way better. It’s a much richer experience. You can do a lot more. Increasingly, I see customers wanting to use best-of-breed products that work together. They don’t have to use a single monolithic stack.”

Kelly Earley is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com