Much has been made about the video wars taking place between Zoom, Microsoft, and Slack as they battle for collaboration supremacy. However, this storyline is only partially correct. Zoom, Microsoft, and Slack are fighting this battle on two fronts. On the one side, they’re brawling to be the best video conferencing vendor (though this is primarily a Microsoft versus Zoom arms race). On the other front, there is the emerging Chat War, which is being waged with even greater measures of both vitriol and ambiguity. Here, Slack and Microsoft struggle over the top spot. Let’s dive into the Chat War and identify the true victor.
The Chat War Defined
What is this chat war? First, it not truly just chat. Certainly, the basis is 1-to-1, or 1-many chats or group chats which ostensibly provide a better alternative to email for collaborative discussions. But it also includes various types of document management and document sharing scenarios. We’re essentially talking about the battle for office hub supremacy. Since Zoom’s chat functionality and market presence is still in a more nascent stage, the Zoomers don’t currently fit into this battlefield. Turning next to Slack, if one listens carefully to their CEO, Stewart Butterfield, it might appear that the Slackers don’t believe there’s a war at all. “What we’ve seen over the past couple of months is that Teams is not a competitor to Slack,” Butterfield told CNBC in an interview after Microsoft’s Q3 earnings update in early May. However, as others point out, Slack’s recent 10-Q SEC filing names Microsoft as its main competitor. As for Microsoft, they revealed way back in July 2019 that after less than 2 years on the market they had already surpassed Slack in regular usage. Game on. The battle is over market share — who’s got it now….and who will have it later.
The Measuring Stick Fracas
Looking ahead to the signing of the armistice, the losing side will have capitulated. But how will we know? According to Microsoft it’s because they will emerge with the biggest DAU (daily active user) count. However, the Slack camp insists that the market should focus on Slack’s engagement metrics, noting that Microsoft may count people as users even if they’re not really using Teams. This includes users who may only have it open while using other Office 365 apps and services. Butterfield said, “just look at the weak engagement numbers that Microsoft themselves reported about Teams.” In fact, Slack VP Brian Elliot has championed the idea that the “U” of DAU is what really matters — “you can’t transform a workplace if people aren’t actually using the product.”
Defining Daily Active Users
Microsoft defines collaboration DAU “as the number maximum daily users performing an intentional action in the last 28-day period across the desktop client, mobile client, and web client,” Microsoft 365 corporate VP Jared Spataro recently said. So, what’s an “intentional action”? “Examples of intentional actions include starting a chat, placing a call, sharing a file, editing a document within Teams, participating in a meeting, etc.” Microsoft removes “passive actions” like auto-start/login, minimizing a screen, or closing the app from its calculations, and removes duplicate actions across a single user ID.
Here’s where it breaks down: A number of different industry pundits, including Rob Scott at UC Today have correctly noted a few different areas where DAU calculation “cheating” may occur:
- Free vs. Paid: Both Microsoft and Slack offer very compelling free user licenses. Should free licenses figure into DAU, or only paid ones?
- Chat/Collab vs. Other: Microsoft counts a DAU for conferencing or phone action which is different from a Slack chat. Should Teams still get credit for a non-chat DAU?
- Login vs. Engagement: Microsoft says that it has eliminated “passive actions” like logins, but are we sure that the logins are always correctly parsed from the true engagers?
- Internal vs. External DAU Usage: Does the DAU count provide an accurate picture of how employees are collaborating and chatting externally (in addition to internally)?
Daily Active Users Versus Digital Workplace Transformation
The daily active user metric means different things to Slack and Microsoft. It’s worth noting that not all Microsoft Teams’ daily active users engage with the chat and collaborative workspace features of Microsoft Teams. In fact, in today’s COVID-19 world, there are more users leveraging Teams for video conferences and calls. However, if an organization is trying to evolve to a culture of working in collaboration team spaces with chat, files, and apps, they must adjust their horizon. Look carefully at the ratio of channel messages to private chat, calls, and meetings across the tenant, not just the top line active user’s statistic. Ultimately, IT must determine whether Microsoft Teams is the place where work happens.
That brings us back to Slack. Slack argues that not all Daily Active Users are created equal. The way we work is fundamentally changing. It’s becoming faster, more adaptable, and more collaborative. This change is fueled by engagement. This is what should be measured. Of course, this is in spite of the fact that most of the SaaS industry relies on DAU as the measuring stick.
On the other hand, the Microsoft argument is that they are simply filling more seats. They caution Slack about going down the rabbit hole of trying to highlight DAU numbers which may be buffered by Office365 integration, as that approach could bring up more questions than answers for Slack and its investors. This group likely cares much less about engagement and much more about future adoption and revenue.
Microsoft also continues its argument by questioning the engagement concept as a metric. First, is there an agreed industry standard to measure engagement? Second, is the fact that some workplaces are looking less into the fundamental transformations offered by Slack as much as they are into efficiencies. In other words, engagement may be the best way to measure and a noble goal. However, “spending more time using an app does not guarantee more human understanding and connection, it can be quite the opposite…. being more harmful than good. By lowering the barrier to initiate communication, the hidden side effect is that Slack has the quiet capacity to exponentially increase communication overhead. Resulting in much more voluminous, lower quality communication.” In other words, too much engagement is actually a bad thing.
To the Victor Goes the Spoils
The truth is that most companies (including Microsoft and Slack) are providing numbers that are more vanity-based than factual. Sometimes this is purposeful, and sometimes it is just the marketing teams getting a little overzealous. Back in April, Zoom shares dropped after the company was forced to walk back on claims it had 300 million daily active users. As it turns out the 300 million number was only DMP (daily meeting participants). The difference between daily active users and participants is that meeting participants can be counted more than once.
Utilizing the best math available, here’s the current battle status:
- Microsoft Teams: Looking first at the Zoom DMP measurement, Teams is trailing Zoom with only 200 million meeting participants. However, Microsoft’s most recent (mid-May) DAU public statements net out at 75 million. Discounting that back using some combination of the above Slack and/or UC Today calculations, a more accurate DAU count (who are full chat/collaboration users) is likely around 50% of the stated DAU, or 30-40 million. However, Microsoft also has 258 million paid seats for Office 365, which includes access to Microsoft Teams. Many estimates are that only about 30 percent of its Office 365 paid seats are using Teams already. This leaves still a tremendous upside for future Teams DAU growth.
- Slack: Slack unfortunately hasn’t issued an updated user count since October, when it claimed to have 12 million daily active users. What Slack is reporting is likely the closest match to the actual DAU. However, this may be the reason for their lack of recent reporting. Despite the COVID-19 collaborative work surge, Slack DAU growth appears to still be slow.
So, who is the winner? The answer is the customer. All this competition makes for increased focus by the software vendors on improved user experience, better/more features, and greater vendor responsiveness to existing customers. If you want to drill in and more accurately count your own corporate DAU, consider trialing our PowerSuite software. Not only can you examine your own DAU, but you can benchmark and compare your company’s business collaboration metrics with similar data from other organizations. Beyond PowerSuite’s outstanding workplace analytics, it will also help with collaboration security & governance so you can achieve world-class collaboration security and management across your organization.