You’ve probably heard by now that Microsoft bought LinkedIn for an astonishing 26.2 billion dollars. This is the largest acquisition Microsoft has ever made and it is a big gamble. I’ll tell you why:
LinkedIn has 433 million users in over 200 countries but only 105 million monthly average users. LinkedIn will become a part of Microsoft’s productivity and business processes unit but will keep its name and independence. Jeff Weiner will remain as C.E.O. of LinkedIn, reporting to Satya Nadella, C.E.O. of Microsoft.
Microsoft C.E.O. Nadella said the overall objective of the acquisition is to “accelerate top line growth.” However, Microsoft has a poor record with previous large acquisitions. In 2014 it bought the handset operations of Nokia for about $9.4 billion, but ended up writing off most of its investment.
So why did Microsoft want to acquire LinkedIn? Now it can integrate LinkedIn with Windows programs such as Skype, PowerPoint, Excel, Outlook and others. This also includes the popular editing tutorial website Lynda.com that Microsoft bought in 2015 as well as Cortana, Microsoft’s digital assistant similar to Siri.
So what does this mean for the future of LinkedIn? The website reported a loss of $166 million dollars in 2015 and a large decline in growth of users. Hopefully, with this acquisition Microsoft can get it right for LinkedIn and preserve the future of the site. LinkedIn and Microsoft coming together could be a great thing because Microsoft already has various office programs that it can and already plans to integrate into LinkedIn. This can help reimagine the website and make it fresh for users and encourage growth. It will be exciting to see what Microsoft does with the website once the transaction closes, which should be by the end of this year.
It has been reported that Microsoft also plans to use LinkedIn’s Sales Navigator along with Microsoft’s Dynamics. Dynamics is is a line of enterprise resource planning and customer relationship management software. With these two coming together is planned to provide “actionable insights” from background information about LinkedIn users to provide Dynamics users the ability to “find leads and close deals.” Microsoft’s CEO spoke about the now ability to provide “social selling” by using the information the LinkedIn users and companies have put into their profiles. Nadella characterized this as bringing Microsoft’s Cloud and LinkedIn’s network together as one. While this can provide an incredible amount of information to marketers, there also comes the issue of privacy. LinkedIn users may object to their information be used to make them into sales targets. I believe this will cause issues with the current users of LinkedIn and some may leave the site for good unless this aspect of information being pulled is either stopped or LinkedIn users are reassured that their privacy will be protected.
LinkedIn is labeled as a social network although there really is only one aspect of the website in my opinion that is really “social” and that is the Group Discussions. Group Discussions do not contribute to revenue for the website, so this feature may be cut with the acquisition. Without this feature, if you aren’t requiring the premium membership services LinkedIn sells or searching for a job, why would you need to use the website then?
This is what, in my opinion, makes this acquisition so interesting. There are so many different ingredients trying to go into one pot, I’m not sure they will all fit. I suppose we’ll just have to see what happens.