The technology corporation has backed out from its acquisition of the messaging app Slack which it had initially decided to acquire for $8 billion.
For a price of $8 billion, Microsoft Corporation showed its interest in acquiring Slack, a messaging platform similar to that of Skype, on Friday. However, according to recent news the technology giant backed out from that acquisition as Qi Lu, the Vice President of Microsoft’s application and services failed to convince the founder Bill Gates, the CEO Satya Nadella along with a number of other board members to go forth with the acquisition.
The company is widely known for its Windows Operating System however it is trying to direct its efforts towards its video and messaging platform, Skype. Slack, the messaging app that Qi Lu wanted to acquire was launched back in 2013 in San Francisco. This application is quite similar to Skype as it offers file sharing, video and text messaging as well. The sole reason as to why Microsoft was drawn towards the app was that it gained tremendous popularity after its release in 2013.
Presently, Slack has over 2.5 million users out which 700,000 are paying users, according to a research conducted by Statistics Brain Research Institute. Due to this reason, many now believe that the company might have made a handsome amount of revenue in the past two years that it has been operational for; this clearly indicates that putting a price tag of $8 billion on the organization was simply now enough.
The increased popularity of the messaging app indicates that soon enough it will be in direct competition with Skype as it also plans to introduce advanced features to the platform soon. The company is aiming at being big and better if it wants to stand next to Skype hence proving that even if the offer was still on the table, it would have given a serious though and might not have immediately agreed on that price.
The acquisition of Slack would not have been the first one on the technology giant’s part; initially it has acquired Skype back in 2011 for a price of $8.5 million along with another application by the name of Yammer for $1.2 billion. This would have been the third acquisition by Microsoft Corporation. However, Yammer wasn’t a profitable acquisition on the company’s part as it was broken down into various parts to make Microsoft 365.
While many people believe that the acquisition was worth the price tag that the tech organization put on it, on the other hand many believe that it was not even close to that. For example: Facebook Inc. had acquired WhatsApp for a price of $22 billion back in 2014 indicating that it paid a price of $55 per user however if Microsoft has gone forward with the acquisition of Slack at the same price, it would be paying at least 45 times more than what the social media giant paid for its messaging app. Ultimately, it’s quite evident that it was a smart move by the technology business as it saved large capital.
The Redmond, Washington based company can now completely focus on making Skype a bigger and better messaging app and it plays to do so by offering its 74 million users with additional features as well.
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