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An Overview: Microsoft’s Acquisition of LinkedIn

13th December 2016

As Microsoft finalised its acquisition of LinkedIn last week, the world is waiting to see what’s next for the sale that cost Microsoft over $26 billion. With their acquisition of Finnish phone maker Nokia in 2013 falling flat, is purchasing LinkedIn a smarter purchase for the multinational company?

Who Is Involved?

Before we take a closer look at the merger and the problems it has faced, here’s a brief overview of the key players in the deal:

  • Microsoft

A multinational company that develops computer software and technology. Their products include the Office suite, Windows phones, gaming consoles and they own Skype, the popular video chat application.

  • LinkedIn

A professional networking site where you build and engage with a professional network, access and share knowledge and search for jobs.

Why have Microsoft Bought LinkedIn?

Microsoft will be eager to put their failed attempts at mergers behind them and make a success of their LinkedIn purchase.  

LinkedIn is a good prospect for Microsoft. Originally developed as a social network for job seekers, it now has 433 million users and two new members joining every second. But despite its huge reach, LinkedIn only has a tiny percentage of paying subscribers and their user base is largely revenue free. Microsoft is likely to look at capitalising on this, as well as LinkedIn’s most powerful tool – its content. There were a staggering 45 billion page views in the first quarter of 2016 and its content is influential, specialised and highly-read.

The finalised deal was announced by Microsoft Chief Executive Satya Nadella in a LinkedIn post, which set out their plans to unify a professional’s individual profile in one app, bringing together the data on platforms such as Skype, Outlook, the Office suite and SharePoint.

What are the Potential Problems?

Since the acquisition was announced, Salesforce, a lead competitor of Microsoft, have been very vocal about their position on the deal. They have been protesting about the deal to the EU, hoping to corner Microsoft into keeping LinkedIn’s valuable data open to competitors, such as themselves. They have warned regulators to watch Microsoft closely and that they will not accept it silently if access to LinkedIn’s data is closed.

There’s potential for Microsoft to capitalise on their acquisition of LinkedIn – it’s a mature market with valuable, influential content and a huge number of users. However, they are likely to be looking at ways to tackle the environment of mistrust created by Salesforce. With relationships turning sour, they may turn to litigation and arbitration procedures, a service offered by law firms such as Withers. This may help them find a solution to make their merger go smoothly and avoid their reputation for failed acquisitions.

Corey is an all round tech guru who has worked at some major blue chip companies. He started Poweronemedia to share his views and knowledge with the rest of the blogging world.