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The complaint, filed in Europe, threatens Microsoft’s recent ability to avoid regulatory scrutiny.
Slack CEO disses Microsoft Teams hyper growth: Users of dead Microsoft products are being 'force migrated'
Slack CEO Stewart Butterfield addressed competition with Microsoft Teams in the company's latest earnings call with...Slack CEO Stewart Butterfield addressed competition with Microsoft Teams in the company's latest earnings call with investors by arguing that both products have different end goals and highlighting how many enterprise customers who also use Office 365 Slack has added in the last quarter. On the call, Butterfield said that Microsoft's 20 million daily active users aren't a result of organic growth, as they are getting customers who previously used Skype for Business which it rebranded into Teams. Butterfield also touted the Slack's growing enterprise customer base who also use Office 365, trying to suggest that those customers are choosing Slack over Teams. But analysts are still skeptical and say the numbers Slack highlighted are inconsequential in the long run and the company's weak guidance for the fourth-quarter doesn't forecast good growth prospects. Daniel Ives at Wedbush Securities told Business Insider that the underlying guidance is disappointing and that combined with the Microsoft numbers will prove to be a "tough hurdle" going forward. "Right now that's the dark shadow over the company — Microsoft." Daniel Newman, the founding partner and principal analyst at Futurum Research said that Microsoft is just starting to "turn the screws," and is just in the early days of deploying Teams. Click here for more BI Prime stories. Slack CEO Stewart Butterfield dismissed Microsoft's claims of growing momentum within its rival Teams product, suggesting that Microsoft's expanding number of users is not as impressive as it might seem. "Although Microsoft markets Teams as a Slack competitor — and there's no doubt this causes confusion in the marketplace — in practice, these are different tools used for different purposes and our customers achieve markedly different results," Butterfield said on Slack's Q3 earnings call on Wednesday. "Just look at the weak engagement numbers that Microsoft themselves report about Teams and the much deeper level of engagement you see among Slack users," he said. Butterfield went after Microsoft several times during the conference call, underscoring a fierce competition between the two companies that has put pressure on Slack's stock price. Microsoft recently announced that Teams, its workplace chat app, has 20 million users — a significant lead over Slack, which said in October that its workplace chat app has 12 million daily users. Slack did not provide an update to its daily users on Wednesday, but instead painted Microsoft's numbers as the result of Microsoft killing older products and "force migrating" users to Teams. "When they first announced the shutdown of Skype for Business, we expected this," Butterfield said. "Now that Skype for Business users are being force-migrated to Teams, it's reasonable to expect more of the same. Unless they hit a snag, we'd expect them to announce 50 million in the next six months and then 100 million within the next year," Butterfield continued. The comments seemed to do the trick, sending Slack's stock up about 2% in after hours trading. "It's encouraging that Stewart Butterfield addressed the Microsoft question heads-on, since I know that weighs on investors," Rishi Jaluria, an analyst at DA Davidson said. "I thought it was smart for him to say he expects Microsoft to ultimately report 100MM DAUs on Teams and get ahead of the narrative." A much need 'injection of confidence' Still, Jaluria noted that "it may take some time for Slack to shake off the 'Microsoft overhang.'" Indeed, while Wall Street was encouraged by Butterfield's comments, some analysts said Slack's actual metrics and guidance don't show a rosy path ahead. Daniel Ives at Wedbush Securities told Business Insider that the underlying guidance is disappointing and that combined with the Microsoft numbers will prove to be a "tough hurdle" going forward. "Right now that's the dark shadow over the company — Microsoft," he adds. He thinks in particular, Wall Street wanted to see better billings guidance for the next quarter, because that is an indicator of future growth. Microsoft bundles Teams in with its Office 365 productivity suite for business. Analysts have said this gives Microsoft a major advantage that could make it more difficult for Slack to compete. Slack CEO Butterfield said on Wednesday that many of its customers also use Office 365, suggesting that those Microsoft customers are choosing Slack over Teams. Slack said it now has 50 paid customers spending over $1 million annually, and that 70 percent of those customers are also Office 365 users. "We've continued to add Office 365 using enterprise customers at the $100,000 plus level and at the $1 million-plus level. Just as you can expect more Skype for Business users forced over to Teams, you could expect more of these customer wins from us as well," Butterfield said. Slack needed the "injection of confidence" from Wednesday's earnings, said Daniel Newman, the founding partner and principal analyst at Futurum Research. But the company needs to add a lot more customers than what it did in the past quarter if it wants to keep up. He adds that Microsoft is just starting to "turn the screws," and is just in the early days of deploying Teams. Got a tip? Contact this reporter via email at email@example.com or Signal at 925-364-4258. You can also contact Business Insider securely via SecureDrop.Join the conversation about this story » NOW WATCH: Behind the scenes with Shepard Smith — the Fox News star who just announced his resignation from the network