Is Tomasz Tunguz right that Google could buy Salesforce and that Microsoft could buy Workday? Would antitrust laws allow this?
Both make sense, but are expensive.
Google has made a huge push into more enterprise cloud under Diane Greene. Salesforce would bring it all together. Google has bought a number of smaller players, made a huge PaaS push, gotten G Suite to break through into the enterprise for real, and even launched B2B applications like Google Hire. But a lot of this is still small stuff at Google’s scale. Buying the #1 largest SaaS company would add instant scale. The problem? Google’s market cap is “only” $720 billion. Salesforce’s is almost $90b. Add in say a 30% premium and Google would have to pay $120 billion for Salesforce. Is it worth 17% of the company? My gut says no, because Google’s roots are still so B2C and SMB. 17% is a lot for a company that isn’t really enterprise-focused, not really. But maybe.
Microsoft buying Workday has an even stronger precedent — LinkedIn. Workday owns the internal interactions with employees (among other applications), and LinkedIn owns the external directory. Workday+LinkedIn+Microsoft Enterprise products like Dynamics might finally bring Microsoft enterprise application software into the 2.0 age. Microsoft is deep in enterprise software of course, but at the application level, much of its stuff is dated. Its CRM is formidible, but still niche. It’s ERP applications are SMB and old. Workday+LinkedIn+Dynamics push Microsoft into the top tier of next generation business software, not just the past generation. Workday has a market cap of $27b, so Microsoft, also with a $720b market cap like Google (as of when this is written), could digest it more easily.
Also, integrating sales-driven acquisitions are hard. It’s tough to combine sales and marketing and success teams, and the software platforms never merge. So caution makes sense. But the logic is there.
And would anti-trust laws allow it? I’m not an expert, but I say probably. Microsoft already bought LinkedIn. And Google and Salesforce play in mostly different markets, not particularly limiting competition.