The swirling rumors about a Google acquisition of Salesforce seem to have their roots in this Business Insider story from January 7, which in turn seems based on speculation by the investment bank RBC Capital Markets.
Well, who knows? Stranger things have happened.
What I wanted to focus on here is that the rationale offered for the move makes, at a really obvious level, no sense at all. The claim is that Google could boost its lagging cloud business through the acquisition. As one report puts it, “Google can sidestep its arguably struggling organic cloud efforts and wedge itself into at least the number 2 spot in the market with the acquisition of Salesforce.” By crudely adding the revenue and market of the two companies? I guess so.
For context, here’s a snapshot from March 2019 headed “Top Cloud Vendors by Revenue.” Of course, Microsoft Azure and Amazon Web Services are out ahead of the pack. Google is shown behind SAP and Oracle. But look at some of the other names there: Salesforce, yes, but also Accenture and Workday.
Is Workday a cloud vendor in the sense that Microsoft and AWS are cloud vendors? The latter are public platforms which can be used to host or manage data and apps of any kind. They are, as far as I’m aware, entirely content agnostic. Workday is, among other things, a cloud platform. Developers can build, customize, and extend apps on the Workday cloud. But the core of Workday’s offering is its own range of ERP applications.
Salesforce, of course, falls into the same category. It’s cloud native, of course, unlike its most obvious customer experience competitors (Adobe, Oracle, SAP), but the whole raison d’être of the Salesforce cloud has always been to host Salesforce applications, most importantly the CRM. Again, developers can build, customize, and extend apps in the Salesforce cloud. Countless third party apps can run in the cloud, and quite a few companies have built their own businesses natively within Salesforce cloud. But all these third party apps are relevant to Salesforce’s central customer experience mission.
The reason Salesforce is one of the most successful cloud vendors (top three or four depending which list you look at) is precisely not because it is competing successfully with Microsoft and Amazon, but because it is competing successfully with other CRM/customer experience providers. Like Workday, it’s not playing in the agnostic public platform space.
That’s not to say it couldn’t. Why shouldn’t Google re-think the Salesforce cloud as an open platform along the lines of Azure? The question should really be, why bother? I agree with most of what Gene Marks says in this analysis, but my jaw dropped at this: “[Azure and AWS] are not CRM companies. They are cloud service companies that host many applications, with some of them happening to be CRM.
Does Google realize this?” A rhetorical question, perhaps, but of course Google realizes that. Anyone with any interest in the space realizes that.
Google does have a cloud business. If it’s struggling because of performance issues (and I don’t know that it is), Google has the engineers to fix it. If the problems are strategic, as widely suggested, how does acquiring someone else’s infrastructure help?
And of course, the best way to diminish Salesforce’s status among cloud vendors would be to do anything which detracts from the core CRM/customer experience offerings which earned Salesforce its status in the first place.
Maybe this is more than a rumor. Maybe Google is about to make what would probably be the most dramatic move since Microsoft acquired LinkedIn (an acquisition which made perfect sense). But I can’t believe it would do it for the reasons being suggested.