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Slack Partners With Amazon in a Bid to Gain on Microsoft Teams

By Danny Vena – Jun 5, 2020 at 1:28PM

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A booming remote-work economy is ramping up competition in team collaboration software

In conjunction with its first-quarter financial results, business communication platform Slack (NYSE: WORK) this week announced a partnership with (AMZN -2.72%). As part of the multiyear deal, Amazon Web Services (AWS) will adopt Slack's channel-based messaging solution for its employees. In addition, Slack will migrate all its voice and video calling from its Slack Calls feature -- which enables phone calls to other team members from with Slack's platform -- to Amazon Chime. 

The partnership will put both companies in a better position against their common rival. The deal will put Slack on a better footing as it competes with Microsoft's (MSFT -1.48%) Teams business collaboration tool, while AWS goes head to head with Azure, its cloud computing platform.

Slack CTO Cal Henderson, CFO Allen Shim, and CEO Stewart Butterfield in front of the New York Stock Exchange with a banner announcing the company's IPO.

Left to right: Slack CTO Cal Henderson, CFO Allen Shim, and CEO Stewart Butterfield in front of the New York Stock Exchange. Image source: Slack.

This expands the existing cloud computing relationship between Amazon and Slack. Slack's chat app already resided on AWS, but this agreement takes that to whole new level. In addition to using AWS as the foundation for its technology platform, Slack is now making Amazon its preferred partner for a wide variety of cloud computing tasks, such as storage, compute, database, security, analytics, and machine learning, as well as for future collaboration features.

"Strategically partnering with AWS allows both companies to scale to meet demand and deliver enterprise-grade offerings to our customers," said Stewart Butterfield, CEO and co-founder of Slack. "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."

The company was already enjoying a significant degree of success attracting users. During the first quarter, Slack added a record 12,000 net new paid customers, up 28% year over year, while clients contributing $100,000 in annual recurring revenue (ARR) grew 49%. 

The additional functionality resulting from the partnership will no doubt help boost demand even further.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon, Microsoft, and Slack Technologies and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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