Slack and Amazon enter multi-year deal to compete with Microsoft Teams

Despite a relatively spotless earnings report where the company, by all accounts, beat its own expected guidance, Slack saw a post-market trading slide in its stock of almost 16%.

However, a new multi-year deal with Amazon may do wonders to help regain investor confidence while also better positioning the company to take on its emerging rival in Microsoft Teams.

According to a report from The Verge, Slack has chosen to partner with Amazon to roll out its communications platform to an undisclosed percentage of the company’s 840,000 employees. On the backend of the Amazon and Slack deal is that the latter will adopt the former’s Chime platform for its video conferencing feature set, along with the internal adoption of more AWS services for the company.

Slack has been a long time customer of AWS for various cloud services related to chat and the move seems only logical given the nature of industries the Amazon and Slack preoccupy. In addition to adopting Chime, Slack will also leverage its Amazon partnership for analytics, machine learning, compute, storage, AI, security, and scale for the foreseeable future.

Underscoring the entire deal is Slack’s newfound ability to address the elephant in the room, Microsoft, more directly. While Slack CEO Stewart Butterfield took a more tribalistic stance in proselytizing that Microsoft is “unhealthily preoccupied with killing” the company, vice president of Slack, Brad Armstrong took a more business-minded approach to discuss why adopting Chime allows Slack to ratify its mobile video conferencing features the platform arguably lacked in comparison to Microsoft Teams.

For now, we’re just focused on shoring up the back end. As Chime has additional features, we’re looking at bringing the mobile experience to include video, which it doesn’t today. We’re also looking at transcription.

Earlier today, Slack reported that of the 750,000 organizations making use of the chat service and that 122,000 users are paid customers signaling a 28% year over year increase. Meanwhile, a little over a month ago Microsoft reported 75 million daily active users pulling from a pool of 258 million paid Office 365 seats that have access to Teams.

The new deal allows both Amazon and Slack to bolster areas of their services that have proven to be weak spots individually when competing with Microsoft. Amazon gets to offer its customer a flexible and interoperable leading chat service while Slack gets to scale expeditiously while also getting access to Amazon clients they may not have otherwise been exposed to.

Arguably, the deal is a win for Microsoft as well which will allow the company to aim its competitive efforts at a growing, but increasingly singular target in the enterprise cloud services and communications sector.