Microsoft to Salesforce: game on


Satya Nadella

ChinaFotoPress via Getty Images

Microsoft CEO Satya Nadella.

As Salesforce bites its nails and tries to convince regulators to do some intervening in Microsoft's LinkedIn acquisition, Microsoft is pulling its boxing gloves on. 

In an emailed statement, Microsoft's chief legal officer Brad Smith made it clear that Microsoft was ready to spark a price war and "bring competition" to the cloud market that Salesforce dominates, customer relationship management (CRM) software. 

Smith said (emphasis ours)

"Salesforce may not be aware, but the deal has already been cleared to close in the United States, Canada, and Brazil. We're committed to continuing to work to bring price competition to a CRM market in which Salesforce is the dominant participant charging customers higher prices today."

LinkedIn data is the lifeblood of many salespeople

As we previously reported, Salesforce has been trying to convince regulators that Microsoft's purchase of LinkedIn is a bad idea.


Marc Benioff

Dell CEO Marc Benioff

Such complaints rarely result in regulators stopping a deal, especially in a case like this with Microsoft and LinkedIn, where the company is not buying a direct competitor. (Microsoft doesn't operate its own professional social networking site.) And regulators in the US and Canada have already approved the deal.

But sometimes, regulators can be convinced to put conditions on the deal. Salesforce clearly hopes that EU regulators will make Microsoft promise not to block competitors from accessing LinkedIn's data.

LinkedIn is the lifeblood of many a salesperson who uses the site to find prospects and do cold calling. If Salesforce customers were somehow blocked from using LinkedIn, while Microsoft's CRM customers got access to it, that would badly hurt Salesforce's customers, and ultimately Salesforce.

In an emailed statement, Salesforce's chief legal officer Burke Norton explained the argument it is making to regulators.

"By gaining ownership of LinkedIn's unique dataset of over 450 million professionals in more than 200 countries, Microsoft will be able to deny competitors access to that data, and in doing so obtain an unfair competitive advantage."


Plus Salesforce CEO Marc Benioff has been tweeting about it, claiming that Microsoft's top cloud guy, Scott Guthrie said at the Deutsche Bank Technology Conference earlier this month that Microsoft is planning on blocking its competitors from LinkedIn.

(For the record, Guthrie never told attendees Microsoft would be blocking competitors. He only talked about how the data would be integrated into Microsoft's own product.)

Salesforce may have a shot at convincing regulators to attach some conditions. The EU's antitrust chief is said to be contemplating rules that cover data access by competitors in acquisitions.

On the other hand, the effort may fall flat. For instance, Cisco tried for years to get regulators to step in after Microsoft bought Skype and force Microsoft to make Skype open its technology to work better with Cisco's videoconferencing products. Regulators didn't bite.


Salesforce on the offensive

In the meantime, Salesforce is taking this rivalry to a new level too, buying a Microsoft Office competitor called Quip, founded by Facebook's former CTO, Bret Taylor.

Office is Microsoft's cash-cow product. Salesforce intends to integrate Quip into its products and sell it directly to enterprises via its own massive salesforce. 

Microsoft Scott Guthrie


Microsoft's EVP of cloud computing, Scott Guthrie

The two companies have traditionally been rivals, although there was a short period where Microsoft and Salesforce were friendly. Microsoft integrated Salesforce's products with Office 365. CEO Satya Nadella appeared at Salesforce's huge annual tech conference. At one point, Nadella even tried to buy Salesforce.

There are remnants of that friendship still in place. On Thursday, the same day that news broke about Salesforce's complaints to regulators, the companies announced that Skype for Business was now integrated with Salesforce, so you can do a Skype IM or a video call from within Salesforce.

But for the most part, this is shaping up to be an epic, take-no-prisoners type of rivalry.


NOW WATCH: Samsung now says it's too dangerous to even turn on your Galaxy Note 7