Slack and Amazon to partner amid competition with Microsoft

Picture showing communication among teams within slack.
FI
Franklin Izuchukwu

Slack has signed a multi-year agreement with Amazon, allowing the company to move its Slack Calls capability for voice and video calling to Amazon Chime, the shopping behemoth's business communication service.

Slack, meanwhile, will be using Amazon Web Service more, as its cloud provider and "storage, compute, database, security, analytics, and machine learning" source to develop new collaboration features, according to an announcement from the companies.

Such a move links Slack more deeply with Amazon's back end, specifically Amazon Web Services, which means that it is less likely the company will seek more in-depth integration with competing services such as Google Cloud.

Slack has been running on AWS since 2014, with the company now paying Amazon at least $425 million over a five-year period that ends April 2025.

This is a big deal as the SaaS communications tool increases its ties with AWS, but this agreement could also be about slighting Microsoft and its rival Teams product by making a deal with a cloud rival.

In the past, Slack  CEO Stewart Butterfield has had choice words for Microsoft saying the Redmond technology giant sees his company as an "existential threat."

This is an increase from a previous payment of at least $250 million, which ends in July 2023, according to a US SEC (Securities and Exchange Commission) filing.

Amazon is the second-largest employer in the United States, with over 840,000 employees working for the company either full- or part-time.

At the end of December 2018, it was reported that Amazon has over 20,000 people working in its warehousing and logistics departments in the UK, a massive increase from its under-3000 staff in 2010.

It is unclear exactly how many of its employees will be using Slack, although it could be considerably more than the communication company has previously handled from any one employer.

Previously, Slack's most significant client was IBM, providing its software to the technology giant's 330,000 employees.

The move also comes as Slack faces increasing competition from Microsoft and its Teams service, with the CEO of Slack Stewart Butterfield saying that Microsoft, is "is perhaps unhealthily preoccupied with killing us, and Teams is the vehicle to do that.

Whether that's true or not — Teams is but one piece of a huge technology company — it's impossible not to look at the deal in this context. Aligning more deeply with AWS sends a message to Microsoft, whose Azure infrastructure services compete with AWS.

Butterfield didn't say that, of course. He talked about how synergistic the deal was. "Strategically partnering with AWS allows both companies to scale to meet demand and deliver enterprise-grade offerings to our customers.

By integrating AWS services with Slack's channel-based messaging platform, we're helping teams easily and seamlessly manage their cloud infrastructure projects and launch cloud-based services without ever leaving Slack," he said in a statement.

The deal also includes several other elements including integrating AWS Key Management Service with Slack Enterprise Key Management (EKM) for encryption key management, deeper alignment with AWS's chatbot service and direct integration with AWS AppFlow to enable secure transfer of data between Slack and Amazon S3 storage and the Amazon Redshift data warehouse.

AWS CEO Andy Jassy saw it as a pure integration play. "Together, AWS and Slack are giving developer teams the ability to collaborate and innovate faster on the front end with applications, while giving them the ability to manage their backend cloud infrastructure efficiently," Jassy said in a statement.

Like any good deal, it's good for both sides. Slack gets a big customer in AWS, and AWS now has Slack directly integrating more of its services. One of the reasons enterprise users are so enamoured with Slack is the ability to get work done in a single place without continuously having to change focus and move between interfaces.

This deal will provide more of that for common customers while tweaking a common rival. That's what you call win-win.

"If Slack is incredibly successful over the next two years … it does matter to Microsoft because the relative importance of email is hugely diminished. If email becomes less important, then that whole $35, $40 billion-a-year collaboration productivity business unit is threatened," Mr Butterfield said.

In a press release about Microsoft Team's daily active users, Microsoft directly compared its 13 million users to Slack's 10 million. In an interview, Brian Goode, head of Office 365, has said that while he has a "great deal of respect for [Slack] as a competitor .. I feel really good about our value proposition to our customer, and what we have to offer."

"The future of enterprise software will be driven by the combination of cloud services and workstream collaboration tools," said Butterfield in a statement after the Amazon deal was announced. "Strategically partnering with AWS allows both companies to scale to meet demand and deliver enterprise-grade offerings to our customers.

"By integrating AWS services with Slack's channel-based messaging platform, we're helping teams easily and seamlessly manage their cloud infrastructure projects and launch cloud-based services without ever leaving Slack."

Amazon said that the partnership could bring more ways for customers to work in the cloud.

"Together, AWS and Slack are giving developer teams the ability to collaborate and innovate faster on the front end with applications, while giving them the ability to manage their backend cloud infrastructure efficiently," said Andy Jassy, CEO of AWS.

"AWS customers gain a powerful new means of managing their AWS resources that will help teams collaborate and build more applications using the broadest and deepest set of cloud services. We look forward to working with Slack to expand the ways we can help our customers innovate in the cloud."

Share With Friends