It’s not easy to surprise people nowadays. Crises, revolutions, things Donald Trump says… Sometimes it really seems we have seen it all. But when Microsoft announced that it paid $26.2 billion to buy Linkedin, we all took a moment to think about it. We were all thinking: “What’s next for Linkedin?” The answer is not easy, and it can go both ways, from a brilliant business deal to a complete waste of money.
On June 13th, Jeff Weiner, boss of Linkedin, sent an open letter to everyone who works in his company. And just like every smart influencer on Linkedin, he shared the letter with everyone else on the planet by posting it on his Linkedin profile.
“IMAGINE a world where we’re no longer looking up to tech titans such as Apple, Google, Microsoft, Amazon and Facebook…because we are one of them,” Jeff wrote in his post. It was clear that Linkedin’s official stand was that the buyout is one of the best things that could have happened to the company. It was also the third-largest acquisition in the history of tech industry.
Of course, it’s not all about the money. According to Microsoft’s new boss and re-energiser, Satya Nadella, this deal has the power to transform businesses’ and workers’ productivity worldwide.
On a scale from one to Microsoft, where exactly is Linkedin?
Linkedin is the largest professional social network so far, with around 430 million registered users. Although 100 million visitors come to Linkedin each month, some analysts have questioned where is Linkedin heading to, or in business language, how much bigger can it become?
Linkedin pays its bills by selling subscriptions to corporate recruiters who are using its rich database to look for employees. Unfortunately, revenue growth has been slower than expected. In February 2016, Linkedin’s share price sank by more than 40% in a day. The company also revealed that it made a net loss of around $165 in 2015.
Despite these financial problems, Microsoft paid 50% premium over Linkedin’s share price to acquire the company. Obviously, Nadella didn’t want to wait any longer.
But even without financial issues, it was clear that Linkedin has hit a slump. It seemed as if the network reached its peak, and now it has nowhere to go besides down. And then, there was Microsoft.
What is Microsoft up to?
Microsoft is still the world’s largest software-maker that has to compete with tech behemoths such as Google and Amazon. Mr Nadella is fully aware that computing has shifted from desktop era to mobile devices and cloud, and it seems that he has a plan to reposition Microsoft in this new and improved business framework. That means putting less emphasis on Windows, and focusing more on cloud computing and artificial intelligence. With Linkedin on its team, Microsoft is closer to this goal. The data Linkedin collects could be incredibly valuable to Microsoft in its plans to manage relationships with customers.
On the other hand, there are people who think that this acquisition was a disastrous decision for Microsoft. It may be because Microsoft’s history with big deals like this is pretty bad. In 2011, Microsoft bought Skype for $8 billion, and still hasn’t seen a success from it. In 2007, the company wasted over $6.3 billion on aQuantive, an online-advertising firm. In 2014, Microsoft bought Nokia’s handset business for $7.6 billion. Needless to say, it wasn’t a good investment. But, all of these “disasters” happened before Nadella took over, which means that this time, Microsoft might be onto something.
With Linkedin, Microsoft can apply its existing products in Office and services such as Word, Excel and Outlook. Besides Office, Microsoft can also embed Linkedin with Skype. Finally, can you begin to imagine what Linkedin can do to Microsoft’s Customer Relationship Management? With Linkedin’s data, managing relationships would get to an entirely new level at Microsoft.
Pros and cons of Microsoft managing personal data
According to Nadella, Microsoft will become the platform for managing employees’ personal details from around the internet, all thanks to Linkedin. Also, Microsoft will be able to predict better what information users might find useful, suggesting news and articles related to a project someone is working on, for example. Linkedin’s newsfeed will therefore become a hub for useful and customised information sharing at the office.
Yet, how many companies are likely to actually give out so much information about their employees? Some employers already see Linkedin as a tool other companies use to ‘steal’ their workforce.This may mean that they will not want to allow Linkedin on their networks. Also, employers may feel uncomfortable knowing that Microsoft is using their data, and they may stop using Linkedin for good. Nadella is aware of these concerns, and says that Microsoft will use this precious data “tastefully”.
Professional cloud and professional network
Nadella wants to keep Linkedin as an independent company. In an interview with The Wall Street Journal, Nadella said: “It’s really the coming together of the professional cloud and the professional network.” Basically, what he meant was why keep a professional software and social networks separate when they can work together and serve the humanity in the most useful ways. But is this true? Was this a smart business decision for Microsoft after all? Only time will tell.
Do you allow your employees to use Linkedin? Did you perhaps find some of your employees on this business network? Share your experiences and learn about the best practices from other professionals at the UK Digital Experience Awards 2016!
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