Salesforce-Slack deal: DOJ requests more info

Marc Benioff

Katie Kramer | CNBC

The U.S. Justice Department’s Antitrust Division has asked Salesforce and Slack for more information ahead of Salesforce’s plan to buy the smaller software company for $27 billion, Salesforce said Tuesday.

The development could indicate greater scrutiny into prominent technology transactions under the Biden Administration.

Even with the additional layer of evaluation, Salesforce still expects to close its deal for Slack in the quarter that ends on July 31, according to a regulatory filing.

The review, known as a second request, is not unprecedented: GE’s 2017 Baker Hughes acquisition, Charles Schwab’s 2020 TD Ameritrade deal and Anheuser-Busch’s 2020 transaction with Craft Brew Alliance, which involved the sale of Kona Brewing’s Hawaii operations to another company, all faced similar requests.

There are signs the U.S. might take a stronger approach to antitrust enforcement than it did under Barack Obama, CNBC reported in January. In Congress, Amy Klobuchar, a Democrat from Minnesota who became chair of the Senate’s Judiciary subcommittee on antitrust this month, has proposed a sweeping reform of antitrust enforcement.

“We’ve appreciated our constructive dialogue with the Department of Justice and look forward to it continuing,” a Salesforce spokesperson told CNBC in an email. “We strongly believe this transaction will be transformative for customers and the industry and will enable companies to grow and succeed in this all-digital, work-from-anywhere world.”

The proposed deal, which would be Salesforce’s largest to date, would unite two companies that both seek to challenge Microsoft, the world’s largest software company.

Slack emerged as a trendy tool where colleagues could chat with one another in recent years, and while the company’s product did become more heavily used during the coronavirus pandemic, Microsoft’s competing Teams app, which businesses get when they pay for Office 365 productivity-software subscriptions, has shown more visible growth. In July Slack said it had submitted an antitrust complaint against Microsoft to the European Commission.

“We’re happy to work with regulators to ensure that they have a complete understanding of this transaction and why we believe it will be good for competition,” Jonathan Prince, vice president of communications and policy at Slack, said in a statement. “We are confident that it will be approved when that process is completed. Most importantly, we want to underscore that our entire business is grounded in open access. We want our customers to have the flexibility to make the best choices for their teams, and we are committed to remaining software agnostic to guarantee exactly that.” 

Correction: An earlier version of this story contained a bullet point that mistakenly identified the company that filed an antitrust lawsuit against Microsoft. It was Slack, as was correctly stated in the main body of the story.

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