Amazon And Slack Deepen Partnership In A Bid To Compete With Microsoft

Amazon Inc. AMZN and Slack Technologies Inc. WORK are forming a strategic partnership that will help the two companies take on Microsoft Corporation MSFT whose Teams video-calling software is also gaining popularity.

What Happened

Amazon has licensed Slack, a work-oriented collaboration tool for the use of its employees. In return, Slack will utilize Amazon Web Services’ Chime software to underpin its own video-calling feature, reported CNBC. 

The collaboration between the two companies will help them better compete with Microsoft, whose Teams video-calling software is increasingly popular among companies and schools amid the ongoing pandemic.

In an announcement made Thursday, the two companies disclosed that Slack would deepen the use of AWS services. 

Why It Matters

The partnership is in addition to Slack’s cloud contract with AWS, for which Slack will pay AWS $425 million over a five-year period until April 2025. 

According to CNBC, Slack has run its service on AWS since 2014 and has depended on Amazon for servicing additional demand arising due to the pandemic.

Amazon is the second-largest private employer in the United States and has over 840,000 full-time and part-time employees, who would now be able to use Slack.

Users would be able to make video calls on mobile devices as well as add transcripts of calls that can be automatically added into Slack text conversations, revealed Brad Armstrong, vice president of business and corporate development at Slack.

Slack reported losses of 2 cents per share and sales of $201.70 million for the first quarter of the year. Paid customers rose 28% year-over-year to 122,000.

Price Action

Slack shares traded 14.97% lower at $32.26 in the after-hours session on Thursday. The shares had closed the regular session 4.91% lower at $37.94.

Amazon shares traded 0.14% lower at $2,457.15 in the after-hours session on Thursday. The shares had closed the regular session 0.72% lower at $2,460.60.