On Monday, we learned about Microsoft’s $26 billion acquisition of LinkedIn, a deal which will apparently preserve the social network’s brand, company culture, independence, and CEO, while helping Microsoft with its “bold ambition to reinvent productivity and business processes.” Along those lines, Tom Warren at The Verge sees Microsoft using LinkedIn’s vast data trove and cachet as the leading professional networking site to turbocharge its enterprise software offerings, though some challenges will undoubtedly remain:
Google and Facebook have both shown interest in expanding into the social workplace, but LinkedIn has the advantage of being seen as the professional network. Microsoft might not be discussing rivals just yet, but this LinkedIn acquisition is a big bet on the future of machine learning and the ability to secure its control of enterprise software and services.
Microsoft now has a huge social network to fend off advances from Google’s suite of productivity services, but it still needs to convince businesses not to use Facebook at Work or Google Apps instead. It also faces the tough job of integrating LinkedIn into Microsoft’s software, services, and management. Microsoft’s previous acquisitions have been mixed affairs. The software maker acquired Yammer nearly four years ago, and bought Skype for $8.5 billion back in 2011. Both of those acquisitions have been integrated more closely into Microsoft’s Office business, but they haven’t been particularly rewarding.
LinkedIn is a different beast, and many outsiders will be watching patiently to see exactly how well Microsoft integrates the social network into everything the company provides for businesses. Microsoft’s enterprise-centric intentions are clear, and it has gone on the offense today to prove it.
Likewise, by way of explaining Microsoft’s willingness to pay such a hefty sum for LinkedIn, BloombergView writer Leonid Bershidsky calls the deal “a major play for a market no company has yet captured — intracorporate communication”:
Microsoft is not paying $26 billion just for LinkedIn’s existing business. It’s paying for an opportunity to sell more complete systems to corporate customers. In addition to cloud services, customer relationship management software and a system that can run the same applications on desktop and mobile devices — which no one else is offering — Microsoft’s will soon offer an internal communication platform that comes with some sales lead generation and recruitment functions. Facebook cannot offer that to corporate customers: Unlike LinkedIn, it never focused on the professional aspect of its users’ lives, and it’s got the wrong data about them.
[Microsoft CEO Satya] Nadella wants his company to own the modern office. No investment is too large in pursuit of that goal. That he and [LinkedIn CEO Jeff] Weiner can communicate in the language of business manuals and self-help books is just a happy cultural accident: At least they will understand each other.
Mike Murphy at Quartz characterizes the deal as a foray into sales software: