- Amazon’s market-leading cloud business Amazon Web Services just announced a big partnership with business communications company Slack.
- Even before to the partnership, analysts suggested Amazon could buy a company like Slack or Zoom to replace its own unpopular chat app Chime and get in on the flood of customers forced to work remotely during the pandemic.
- Now, the partnership gives Amazon a chance to look under Slack’s hood and see whether it would be a good fit for an acquisition, one prominent cloud analyst said.
- Are you a current or former Amazon Web Services employee? Contact this reporter via encrypted messaging app Signal (+1-425-344-8242) or email (firstname.lastname@example.org).
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Amazon’s recent partnership with Slack provides a “testing ground” to let Amazon get “under the hood” and see whether it would be a good fit for an acquisition, cloud-industry analyst Daniel Newman said.
Amazon Web Services and Slack announced on June 4 a partnership to use Amazon infrastructure for Slack tools including audio, video, and screen-sharing. As part of the deal, Amazon will start rolling out Slack to its employees, and Slack for the first time publicly proclaimed AWS as its “preferred cloud provider,” and raise its commitment to the unit to $425 million.
Even before to the partnership, analysts including Newman posited that Amazon could buy a company like Slack or Zoom to replace its own unpopular chat app Chime and get in on the flood of customers forced to work remotely during the pandemic.
“It’s a clear opportunity to get more deeply under the hood,” Newman, an analyst at Futurum Research, told Business Insider. “Amazon’s Chime product is limited in adoption and Slack is beloved, but has no direction when you compare it to Zoom. Microsoft has Teams and Google has pretty complete meeting applications. When you look at a suitor like AWS, it’s a really good potential fit.”
AWS declined to comment and Slack has yet to respond to a request for comment.
Amazon is the clear winner in the cloud market when it comes to infrastructure, but it is generally thought to lag behind Microsoft and Google in terms of cloud-based software. And software matters in the cloud wars: As one analyst recently told Business Insider, Microsoft’s strength in office applications may have helped it win the $10 billion Pentagon cloud-computing Joint Enterprise Defense Infrastructure contract over AWS.
To be sure, Newman said, only Amazon knows whether it’s actually considering a deal, and AWS isn’t typically as acquisitive as Microsoft or Google.
Microsoft spent more than $9 billion during its last fiscal year on acquisitions and Google Cloud Platform is explicitly looking to acquisitions to catch up to AWS and Microsoft in the cloud space. Both have opened the purse strings for major purchases in the past few years: Google recently bought Looker for more than $2 billion, and Microsoft dropped $7.5 billion on GitHub in 2018. For comparison, Amazon’s biggest cloud-related acquisition appears to be Annapurna Labs for $370 million in 2015.
“AWS growth has been very organic, but it’s expanded in one area slower than everyone else,” Newman said, referring to cloud software. “I already thought Slack was a great fit (for an AWS acquisition), and this really sets the stage for that to happen.”
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SEE ALSO: Slack just committed $425 million to Amazon Web Services. Here’s how much other companies like Zoom, Netflix, Snap, and Pinterest are spending with cloud providers like AWS, Google, and Oracle.
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