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Should Google buy Slack to bridge messaging gap?

Should Google buy Slack to bridge messaging gap?

As Slack continues to get more popular, Google's lack of a blockbuster app for team messaging could become a problem for the tech giant. Experts weigh in on whether or not a Slack acquisition makes sense for Google.

A lot changed in the enterprise messaging and collaboration market during the final months of 2016. Facebook formally entered the space with Workplace and the accompanying Work Chat app, for example.

Microsoft released Teams. Google rebranded its portfolio of apps for business as G Suite.

Google does not, however, appear to have a clear strategy or blockbuster app for messaging or group chat in the enterprise.

Google is likely capable of overcoming this challenge on its own, but experts suggest Slack is a viable acquisition target that would instantly boost G Suite's performance and influence in enterprise communications.

'G' in G Suite stands for 'gap' in team messaging

Google needs enterprise collaboration tools "beyond just nice-to-have capabilities," and that missing link is all the more pronounced following the release of Microsoft Teams and Facebook Workplace, according to Craig Le Clair, vice president and principal analyst at Forrester Research.

Microsoft has an awkward abundance of chat-powered apps in Office 365, but its suite is complete, Le Clair says, while G Suite still has a big "gap" in its offering for team messaging.

Adam Preset, research director at Gartner, says Google has the expertise and infrastructure to create a team collaboration experience that's centered on messaging.

The real challenge, however, is "crafting an experience that is useful and compelling when there are so many other options in a very dynamic market," he says. "'Virality' among teams is Slack's foot in the door, which allows lines of business to experiment.

The Google experience must be attractive enough to keep Google customers within their ecosystem and add buzz and value to their overall bundle."

[Related: Why Facebook should buy Slack to win the enterprise]

Slack is one of the most dynamic and freshest players in enterprise messaging today. The independent, albeit venture-capital-backed startup generated tremendous interest since it released its app in early 2014. In October, Slack reported more than 4 million daily active users and 1.25 million paying customers.

The company also expanded its enterprise chat service into a platform by quickly integrating more than 600 apps, using its API.

No obvious indication exists that Google is considering an acquisition of Slack, but considering the gap in its G Suite portfolio, such a move isn't particularly farfetched.

Google announced plans to reposition its three-year-old Hangouts app for the enterprise in August, but the company hasn't provided further detail, even as excitement in the enterprise messaging app space reaches new heights and the year comes to a close.

Google this month also deepened its partnership with Slack to make G Suite more useful for organizations that use the popular collaboration tool. The companies plan to bring more Google analytics to Slack to add additional value for customers.

Reasons why Google should acquire Slack

Slack already extended itself into many organizations that run Google services, as well as services from other tech vendors, according to Preset. "Acquiring Slack would give Google a footprint in organizations that might have historically leaned toward competitors," he says. Google and Slack also share the same viewpoint, which "takes advantage of the inherent flexibility, agility and scalability of the cloud."

[Related: Why Slack should worry about Facebook, Microsoft and Google]

Le Clair thinks there's a 25 percent chance that Google will eventually acquire Slack. Such a deal would give Google millions of new customers and the momentum of a widely adopted platform that "really got everything right," from the user interface, to integration points and how younger generations of workers prefer to work, according to Le Clair.

"You're buying something that has been very successful where success is determined by a lot of nuanced capabilities," he says. "You can have the top minds in the world and not get it right."

"If Google has a renewed focus on the enterprise, and if it acquires Slack, it signals that Google recognizes and respects the diverse work styles at play in the modern enterprise," Preset says. "This is a dynamic market today, however, it's clear that market consolidation is inevitable and vendors as large and pervasive as Google can have a serious impact in these early days."

Reasons why Google should NOT acquire Slack

The battle for supremacy in enterprise collaboration and messaging will be won by the company that can best blend personal assistants and proprietary analytics, with a focus on business productivity, according to Le Clair. "Google is so well positioned for that," he says. "Why not focus on that as a distinction and then build the rest around that?"

[Related: Slack CEO describes 'holy grail' of virtual assistants]

The functional overlap of Slack and Hangouts would also require some rationalization, which would likely be a challenge, according to Preset. "Both vendors offer platforms that support APIs, third-party and custom integrations, and extensions into other vendor ecosystems, so decisions would have to be made about strategy and prioritization, as well as logical avenues for consolidation," he says.

Of course, Slack also would not come cheap. The company had a $3.8-billion valuation during its latest round of venture capital funding in April, according to Fortune.com. As is the case with any hot technology startup, a sale would likely spark a multiplying effect that would drive the price well above its private-market value.

Google could build also simply build its own solution, as Microsoft did with Teams, according to Preset.

Regardless of whether or not Google or another tech company buys Slack, the enterprise messaging space is likely to get more crowded and competitive in 2017. Every major enterprise vendor, and now many of the leading consumer tech giants, are targeting business communication with their own takes on multi-threaded team chat.

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