Around two months ago Slack file an antitrust complaint with the European Commission against Microsoft for bundling Microsoft Teams with Office 365, and today the company revealed that they are concerned about retaliation by Microsoft due to this.
The concern was revealed in their latest 10-Q filing with the U.S. Securities and Exchange Commission and notes:
“Furthermore, we could be subject to retaliatory or other adverse measures by Microsoft, its employees, or agents in response to the complaint that we filed with the European Commission.”
Unlike Apple, Microsoft does not have the power of using its platform to ban Slack, but Slack is concerned about a more subtle hostility.
The filing notes:
“Slack currently interoperates with Microsoft products, including Teams, in limited capacities but it is possible that Microsoft may be uncooperative with any future efforts for Slack to interoperate with Teams or other Microsoft products, which could limit Slack’s functionality and make Slack less attractive to users of Microsoft products.”
With Microsoft Teams interoperating widely with other platforms such uncooperativeness would likely become rapidly apparent.
The 10-Q filing also finally admits that Slack is seeing some headwind to their business from the growth of Microsoft Teams, noting:
“This competition has intensified in recent periods and we believe that it has harmed, and may continue to harm, our business, results of operations, and financial condition.”
This is counter to CEO Stewart Butterfield’s latest bluster, saying on Slack’s quarterly conference call:
“On competition, generally, the TAM (total addressible market) is just so big that I don’t think anything, even if it was worrisome, is going to show up in a significant way for a while, but there’s nothing that’s indicating increased pressure there. Win rates are the same. We are now in Quarter 14 of competing with Microsoft. We’ve won over and over again in Office 365-using customers. … No doubt that it causes some friction, it’s another thing for us to overcome, but it doesn’t put any kind of ceiling or limiter on our growth.”
While Slack has benefitted from the Work from Home move, their 49% YoY growth in revenue has revealed that they have largely missed out on the meteoric growth of companies like Zoom and Teams, with Zoom’s revenue increasing 169% YoY.
While Slack appears to attribute this in part to competition from Microsoft Teams, Microsoft has a much simpler explanation, noting:
“We created Teams to combine the ability to collaborate with the ability to connect via video, because that’s what people want. With COVID-19, the market has embraced Teams in record numbers while Slack suffered from its absence of video-conferencing.”
Slack’s share price is currently down more than 18% in after-hours trading.