Should Google Acquire Salesforce?
Rumors have been swirling about Google possibly acquiring Salesforce, which, if it takes place, would be one of the largest in tech history and could rock the cloud computing world. Business Insider has reported that Google is planning to acquire Salesforce, in a deal which RBC Capital Markets says would be valued at around $250 billion. The deal would move the needle for Google in terms of its cloud computing capabilities, giving it greater competitive footing alongside the cloud provider giants, Amazon and Microsoft Azure. In this article, we’ll look at some of the impetus behind Google’s possible acquisition of Salesforce. What would the tech giant stand to gain from such a deal, in return for paying such a high premium? Would the benefit of buying Salesforce offset the gigantic price tag? We’ll also talk about some of the possible changes that could take place at Salesforce, if the deal goes through, and we’ll look at how Salesforce users could be impacted.
Cloud Ambitions
Google has been very open about its cloud ambitions. At the close of 2019, the company announced that it plans to beat out its rivals, Amazon and Microsoft Azure, as cloud providers by the end of 2023. That’s no small feat, given that AWS currently controls 47 percent of the market share of the cloud computing market. Microsoft Azure holds a smaller but still respectable 16 percent of the market, while Google is limping along at just 4 percent. Google’s lofty ambitions for its cloud share have a lot of people wondering just how the company plans to make the jump to a larger market share. That’s why many people are speculating that Google may indeed be planning to buy out Salesforce – or Workday – or even acquire multiple companies in order to build up its share of the Cloud market.
Salesforce’s Cloud Share
An analysis of the leading Cloud Vendors by revenue put Salesforce at a very respectable #4, behind Microsoft, AWS, and IBM. Salesforce clocked in at $13 billion for the year, while Microsoft came in at $32.2 billion; AWS earned $25.7; and IBM weighed in at $19.2. Workday, which has also been mentioned as a possibility for acquisition by Google, came in ninth place on the list of cloud vendors by revenue. Workday earned $2.8 billion in the course of a year, which, while nowhere near the top of the pack, still made a decent showing.
Acquiring Salesforce
It’s no secret that Salesforce is a hugely popular and successful cloud-native product – it’s also no secret that Salesforce operates atop a powerful cloud platform, Force.com. And it’s very possible that Google believes that, by buying Salesforce, it will be cashing in on both the popularity of Salesforce, and the strength of its platform. Analysts at RBC Capital told Business Insider that if Google goes ahead and buys Salesforce, the company will skyrocket to at least second place in the market. That may not immediately fulfill Google’s ambition to lead the pack, but it would certainly be an improvement over the company’s existing position in distant third. However, some analysts are cautioning that it just might not be possible to get the kind of two-for-one that Google is going for. After all, Salesforce is, first and foremost, a CRM. It’s popular because of its business applications, not because of its cloud platform. If Google acquires Salesforce and then tries to re-imagine it as a cloud computing platform, customers might start to leave in droves. That’s because Salesforce’s customer base doesn’t care about cloud computing, per se. They care about the great things that Salesforce can do for them, as a CRM.
Other Options
Google’s Diane Greene, who has been tasked with expanding the tech giant’s cloud revenue, discussed her plans at a conference this fall. She confirmed that Google is looking for partnerships in the field of cloud computing and added that the company is also hiring sales representatives to help it expand. Greene stressed that Google is interested in “organic” growth; she also said that they are looking into major acquisitions. Google’s Cloud division has been facing enormous pressure from the company’s top brass to grow quickly and become competitive with AWS and Microsoft. That may be why Google is looking to move quickly to acquire Salesforce rather than focusing exclusively on organic growth. Rumor has it that leaders at Google and at its parent company, Alphabet, even considered leaving the cloud market altogether if they can’t get competitive with the market leaders. That idea has apparently been dismissed, at least for now – but it seems that the pressure remains on Google Cloud to make dramatic improvements. Google has also hinted that they might be interested in buying the cloud computing company Workday, and analysts are watching closely to see whether the company will try to acquire Workday or Salesforce.
Impact on Salesforce
The jury is still out on how Salesforce would be impacted if Google acquires the CRM. On the one hand, the move would bring in a huge cash influx for Salesforce, which could allow it to further expand its cloud capabilities and grow its infrastructure. On the other hand, Salesforce would lose its autonomy and would be managed by Google. It’s not clear how this would impact Salesforce’s existing staff, for example. Again, some analysts have expressed concern that Salesforce could lose its true direction as a CRM if it’s acquired by Google. The concern is that Google would “water down” Salesforce’s strength in order to capitalize on its cloud capabilities.
Impact on Salesforce Users
How would Salesforce’s users be affected if the CRM giant is acquired by Google? It’s too early to say, of course, and a lot would depend on the specifics of the deal, as well as Google’s management of Salesforce. It’s also not clear how the deal could impact Salesforce’s relationship with Microsoft. If Google takes a relatively hands-off approach, allowing Salesforce to progress as it has been, then of course Salesforce users can expect nothing but positive outcomes from the sale. Greater cash flow would allow Salesforce to expand and experiment, which is only a good thing. If on the other hand, Google wants to take over Salesforce for its cloud platform only, there’s a risk that the CRM could weaken its brand and could stop focusing on the innovation that it’s known for. This would leave it open to being eclipsed in the near future by one of its competitors.
Final Thoughts
It’s worth noting that there has been speculation about Google and Salesforce in the past, and it hasn’t led to anything actually happening. That’s why some people are cautioning that we shouldn’t be holding our breath to see whether anything actually comes of this. If the merger does actually take place, it will be fascinating to see how the tech landscape is reshaped. There are many questions remaining to be answered. Some of the questions are very big-picture: can a company like Google really improve its market standing by sheer buying power? Other questions are more nitty-gritty: how would a merger like this impact Salesforce and its users? For now, this is very much a waiting game; it’s time to watch and learn from whatever may happen.