Microsoft has announced its intent to acquire LinkedIn for $26.2 billion (£18.4bn), representing the biggest acquisition deal in the Redmond giant’s history.
The news, which has arrived a few hours before Apple’s WWDC jamboree in San Francisco, looks sure to have a disruptive effect on both companies, as well as combine two powerful ecosystems in enterprise, social, and mobile.
Microsoft was keen to stress that LinkedIn will retain its “brand and independence,” with Jeff Weiner remaining the CEO and joining Microsoft’s leadership team. Satya Nadella, CEO of Microsoft, told analysts in a call that the Mountain View firm ticked all the boxes for acquisition – expanding Microsoft’s opportunity, specifically expanding the total addressable market, and core to who Microsoft is in its core mission. The companies estimate the combined total addressable market to be $315 billion, with $115bn from LinkedIn’s side and $200bn from Microsoft.
But what does this mean going forward? Microsoft’s push into the enterprise, and particularly enterprise mobile, has long been analysed in this publication. Nadella argued that LinkedIn, under the Microsoft umbrella, will “essentially become the social fabric across all of Microsoft”. Outlook, Excel, Skype, Word, you name it. Even Cortana will be utilised; Redmond’s recent vision of ‘conversation as a platform’, utilising Skype, Bing and Cortana among others to become a more personalised assistant to schedule meetings and save time, in theory becomes richer with the LinkedIn network attached.
This is a view with which Martin Garner, SVP Internet at CCS Insight, agrees. “The justification for an acquisition on this scale has a lot to do with Microsoft’s vision of digitalised businesses running on collaborative and social tools,” he says. “Several key players have a broadly similar vision, and it is likely that other players were competing to acquire LinkedIn.” Garner does not name names, but argues that Salesforce would be the key target for the Microsoft/LinkedIn play, while Julie Langley, partner at Results International, notes that the SaaS giant would be “unnerved” by the “brilliant, bold” move.
Microsoft and LinkedIn's points of reference. Picture credit: Microsoft
Another area which seems to make sense is through the ‘enterprise social graph’, as Maribel Lopez, founder and principal of Lopez Research, explains. “With Cortana in the enterprise, it gets a graph based on employee behaviour with LinkedIn, it owns a broader social graph that comprises business and content and TripIt travel, and it even has hiring information and talent acquisition,” Lopez tells Enterprise AppsTech. “It is a brilliant way to create a comprehensive enterprise social graph, assuming people continue to use it.” Similarly worth noting is the sheer amount of data Microsoft is getting here; Lopez admits the figure is ‘steep’ but adds: “Microsoft can’t build that database or historical information in any short period of time.”
LinkedIn’s graphs are a facet of its strategy which somewhat flies under the radar. The ‘economic graph’, as Weiner put it, is “a digital representation for every company in the world”, alongside job availabilities made possible by those companies, and profiles for every university and higher education institution to help users acquire the skills needed, thus completing the circle. Jeremy Waite, EMEA head of digital strategy at Salesforce, muses on this and argues that while Facebook has a ‘social graph’, to track connections between friendship groups and Twitter has an ‘interest graph’ to see affinity between different profiles, LinkedIn has the economic graph: “When you realise how powerful it actually is, you could almost view it was LinkedIn’s secret weapon.”
Waite’s LinkedIn post, or rather the medium where it is consumed, touches on another important point; its publishing capabilities. LinkedIn’s news feed, Nadella argued, was not only the largest growing part of the company, but also fits in nicely with mobile. “Just imagine now that feed being informed even by the projects you’re currently working on,” he told analysts, citing calendar information, ad monetisation and again using AI to drive engagement. “We’re very excited about the News Feed and what it can do.”
Not everybody will be in agreement with this statement – this reporter cannot be the only one who has seen a major increase in spam and irrelevance when idly flicking through the feed; most disturbingly, an increase in users erroneously believing LinkedIn is a dating site. Yet this is also one of the keys to analysing this deal; the vision sounds great on paper, but LinkedIn has to get its house in order first.
“There are many opportunities for integrating Microsoft services with LinkedIn including Office 365, Exchange, Outlook, Skype, Dynamics to challenge Salesforce.com more successfully, its enterprise messaging service Yammer, its newer graph services such as Delve, as well as its cloud computing services,” says Garner. “It is also a fantastic resource for Microsoft’s artificial intelligence efforts providing a huge amount of data mining opportunities.
“However it will be a substantial integration challenge to do this quickly and extract maximum value from it.”
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