Slack (WORK  ) and Microsoft (MSFT  ) are battling for supremacy to be the number one communication software used in workplaces. Slack was the initial leader with its viral software that was seen as an upgrade over emails.

It let employees chat in groups and organize discussions around certain topics. Microsoft created its product, Teams, which is integrated with Office 365. Slack has several third-party apps that make the software even more powerful.

It's a David vs Goliath battle in many ways. Slack is 1% the size of Microsoft. Microsoft also offers Teams as part of its Office suite which gives it a major advantage. Teams were launched in December 2016, when Slack had 4 million users. Currently, Slack has 16 million users, while Teams has 75 million users. Teams added 30 million users during the last quarter due to the coronavirus. And, there are 250 million Office365 users, so there's still more upside for Teams.

Microsoft's Antitrust History

It's reminiscent of Microsoft bundling Internet Explorer with Windows and making it the default browser when Netscape and Microsoft were battling for browser supremacy.

Netflix (NFLX  ) started as a clear leader due to its early advantage and superior product. Over time, Internet Explorer began to eat into Netscape's market share, no doubt helped that it was the default browser in all Windows OS. Microsoft also was able to make its product free, basically using its Windows profits to subsidize growth.

In 1996, Netscape had an 80% market share of the browser market. And by 2001, Microsoft had 95% market share. At some point, there was regulatory blowback which led to the U.S. government's antitrust case against Microsoft in which it investigated these practices. The E.U. has much tougher enforcement and forced Microsoft to offer European users different versions of browsers that they can select when installing Windows with no favoritism for its version.

Microsoft vs Slack

So it makes sense that Slack filed an antitrust complaint against Microsoft in the E.U., where there's a greater chance of success. Slack is accusing Microsoft of abusing its market power by bundling Teams with Office 365 which is the dominant enterprise software product. Slack wants Teams to be sold individually to customers rather than bundled with Office.

In a statement, Slack said its goal is to be 2% of the company's software budget that makes 98% of the other software more valuable, while Microsoft wants to be 100% of companies' software budget. Microsoft retorted that Teams is built around its video-conferencing features which is unavailable in Slack and has become a necessity during the coronavirus. At a glance, both companies' statements ring true.

What makes this even more interesting is that in 2016, Microsoft was considering buying Slack for $8 billion, but it passed and doubled-down on building its own "Skype for business". Slack started as a pretty basic way to better-manage company communications through IM and group chats rather than e-mail. It has a free, basic version, and it's been remarkably successful in converting free users into paid users due to the product quickly becoming integral to operations.