Microsoft backs out of buying Slack messaging services

Kramer Phillips By Kramer Phillips | 5 years ago

Haven’t heard of Slack yet? Apparently it’s a lot like Skype, a communication application with video messaging and file sharing features. But even if you haven’t heard of it, the company is still big enough for Microsoft to put in a bid to buy.

Unfortunately, that bid was not quite what those in charge were looking for.

According to Uber Gizmo, Microsoft had put in an $8 million bid for Slack, the up-and-coming messaging service based in San Francisco. However, the bid was withdrawn after being shot down by founder Bill Gates and CEO Satya Nadella.

While Slack isn’t quite a household name like Skype, the company has seen a significant amount of success since its 2013 release. The application has around 2.3 million users, which seems small in comparison to Skype’s 74 million as reported by Statistic Brain Research Institute.

But when you put into account that 700,000 of that 2.3 million are paying users, this start-up has generated a good amount of revenue in the two years it has been around. And the slew of new features that are about to be released in order to compete with Skype aren’t anything to ignore either.

So was the dropout a good idea? Gates and Nadella didn’t find the deal appealing enough, though big-name companies have turned down sales before that were met with catastrophic results down the road.

Still, it doesn’t seem as if Microsoft backing down will cause any damage. According to Microcap Magazine, Microsoft paid $8.5 million for Skype back in 2011, and a year later $1.2 billion for Yammer. The latter has proven to be a rather dismal purchase, as Yammer technology was later broken apart with pieces of it used in Microsoft 365, so perhaps another purchase for yet another messaging service isn’t the best idea.

Despite the misstep with Yammer and backing out with Slack, Microsoft has pledged that they plan to do more with Skype in the coming years.