Slack, which was designed as an app for workspaces for communication and sharing, replacing email as a primary medium, is in trouble no. Though it’s still ubiquitous in many newsrooms and offices, it is facing steep competition from Microsoft’s Teams, which is a cloud-based team collaboration software that comes as a part of Office 365. 

On Tuesday, Microsoft announced that Teams has 20 million users now, which is way ahead of Slack’s 12 million customers. As the news was released, Slack’s stocks plunged as much as 10%. The investors are worried that Teams is growing at a much faster pace than expected.

Microsoft’s corporate vice president for Office 365, Jared Spataro wrote in his blog post, “The company’s strategy appears to be working. While these users start with a simple text-based chat, they quickly move on to richer forms of communication and collaboration. For instance, last month Teams customers participated in more than 27 million voice or video meetings and performed over 220 million open, edit, or download actions on files stored in Teams.” 

Since July, Microsoft Teams grew by a phenomenal 54% to more than 20 million daily active users. If it maintains this pace, it will be at double the Slack’s customer base by early next year. Slack, on the other hand, has grown only by 20% since January to reach a mark of 12 million from 10 million.

Slack retaliated back to Jared Spataro’s comment by saying that these figures are misleading as a large chunk of its customer base uses Teams occasionally. A Slack spokesman said, “As we’ve said before, you can’t transform a workplace if people aren’t actually using your product. Slack continues to see unmatched engagement on our platform with 5+ billion weekly actions, including 1+ billion mobile actions. Among our paid customers, users spend more than 9 hours per workday connected to our service, including spending about 90 minutes per workday actively using Slack.”

However, Wall Street has not taken Jared Spataro‘s comments lightly. 

Wedbush Securities analyst Daniel Ives said, “Slack has a great business model that has worked so far to date. But as they go further upstream into Microsoft turf, it will have problems.

Though Wall Street was expecting 16 million daily active users for Teams, the company came up with a 25% higher number, which is enough to give jitters to the investors of Slack.

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