Microsoft pulls out of $8 billion Slack deal

Chris Scott Barr - Mar 7, 2016, 8:56 am CST
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Microsoft pulls out of $8 billion Slack deal

There have been reports floating around since Friday that Microsoft was interested in purchasing the messaging service Slack. This was a bit strange, considering that the company already owns one of the largest messaging services, Skype. It turns out that the rumors were true, and that Microsoft was considering purchasing the company. However, the key word now is “was.”

The number being thrown around for the Microsoft acquisition was $8 billion. For the vast majority of people, figures like that are pretty difficult to even imagine. However, for a company like Microsoft, such prices are fairly normal for picking up an entire company. In fact, when they purchased Skype back in 2011, they reportedly paid around $8.5 billion.

So why would a company pay $8 billion for another messaging service, when they already paid around the same for Skype a few years earlier? The main reason is to acquire the paying customers. It’s estimated that 2.3 million people use Slack, with around 700,000 of them paying for the service. That no doubt brings in a fair bit of money for the company, which appealed to Microsoft.

It seems that not everyone at the company was interested in the deal, as they did end up pulling out of negotiations over the weekend. Originally critical of the deal were the company’s CEO Satya Nadella and founder Bill Gates.

It’s probably a wise move for Microsoft to walk away from the deal, considering all of the potential that Skype has. And a Slack acquisition would have no doubt lead to the two programs eventually becoming one. And while that might have worked for Microsoft, I think that having the two different options is better for consumers.

VIA: BFN


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