MSFT Microsoft Corporation

By Angus Loten 

Microsoft Corp. and Slack Technologies Inc. are competing for a piece of the workplace-collaboration market, but behind the scenes, the companies are doing some collaborating of their own.

Slack's namesake software allows workers to send instant messages, documents and images to individuals or groups without resorting to email. Microsoft has a similar product called Teams that was launched in 2017, bundled into Office 365, which also includes Word, Outlook and Excel.

After Slack had its public-market debut in June, Microsoft said Teams had 13 million daily users, putting it ahead of Slack's reported 12 million.

Slack Chief Executive Stewart Butterfield shot back, saying more than 70% of his company's top 50 customers also use Office 365, suggesting that they prefer Slack to Teams.

As the rivalry played out in public, Slack over the past year has been accessing bits of Microsoft's software that enables different kinds of apps to work together, executives from both companies say.

Known as application programming interfaces, or APIs, these pieces of software are made available by Microsoft to all outside developers, including Slack and other rivals.

The process typically involves at least some back and forth between engineers to fine-tune integrating their software.

Brian Elliott, Slack's vice president and general manager, said the 10-year-old company is using Microsoft's open APIs to build special versions of its workplace-collaboration tool that work with Office 365 tools -- without the need to jump between programs.

Slack's integrations with Outlook and Calendar, launched in April, enable users to receive and reply within Slack to emails sent to their Outlook address, or to get alerts for upcoming meetings or conference calls scheduled in Calendar.

"Switching apps is painful, Mr. Elliott said. "Integrating all of these tools is hugely valuable."

Jared Spataro, a corporate vice president at Microsoft who oversees Teams and other products, said Office 365 APIs "are public and open to customers and all third-party developers."

He said providing access to outside software makers such as Slack allows these companies to tap into Office tools and create new apps that respond to customer demand.

Microsoft last year acquired the GitHub Inc. open-source software repository for $7.5 billion, signaling its increasing openness to third-party developers.

The approach to open-source software marks a strategic shift by Microsoft under Satya Nadella, the company's chief executive officer since 2014. Steve Ballmer, its former CEO, saw open-source tools as a risk to intellectual property rights.

The interoperability of business apps is proving to be a strong selling point with chief information officers, who are reluctant to get locked into any one IT service provider, analysts say. Open-source software and APIs allow them to build Lego-like components from different tech vendors, creating a customized suite of business tools.

The workplace-collaboration market is expected to reach $3.2 billion in annual sales by 2021, up from $2.4 billion last year, according to International Data Corp.

In its latest quarterly results, Microsoft last month reported that revenue from its commercial-cloud operations, which include Azure computing services, Office 365 tools and other cloud services, increased 36% from a year earlier to a record $11.6 billion.

In September, Slack said revenue for the quarter ended in July rose 58% from a year earlier to $145 million.

Mr. Elliott said even though Slack and Microsoft are rivals in the collaboration market, "at the end of the day, customers are going to see value in using our tools together."

Write to Angus Loten at angus.loten@wsj.com

(END) Dow Jones Newswires

November 13, 2019 18:55 ET (23:55 GMT)

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