What Does the Microsoft LinkedIn Deal Mean?.

Over the past few years, the giant of the technological world have been fighting for relevance. The battlefield has had many casualties, including Nokia, Kodak, Blackberry, and more, each with their respective roller coaster of twists and turns. We’ve seen larger companies roll the dice with large scale acquisitions, in the hopes to boost their strength or buy their way into new markets. Microsoft had a painful chew on Nokia; Google played with Motorola; Visa swallowed CyberSource, even Facebook has been active. But today’s announcement by Microsoft and LinkedIn is big. Yes, Microsoft is acquiring LinkedIn for a massive $26.2 Billion.

This is Microsoft CEO Satya Nadella’s first big acquisition since he took over the top job more than two years ago. Microsoft is positioning it’s company to combine the “world’s leading professional cloud” with the “world’s leading professional network.” It’s clear that this is a big acquisition for Microsoft, both in terms of cash value and what LinkedIn brings to the company. More than 433 million people use LinkedIn worldwide to network, find jobs, and reconnect with old colleagues. Many LinkedIn users also pay for premium services to use the site.

Let’s not forget, Microsoft already acquired Yammer for $1.2 Billion, but the outcome was not satisfying  as Yammer barely limped on. Microsoft’s acquisition of Nokia suggests they might head in the direction of consumer mobility, and the LinkedIn deal suggests stronger plays into the enterprise market, with some 433 million users on LinkedIn, oriented around the various parts of the professional life cycle.

In recent years, LinkedIn has undergone some heat as the network is infested with spams, scams and sinister behaviors. Personally, I’ve had several dozen connections with complaints of fishing scams, aggressive sales behaviors and other random events. So how can Microsoft get the network back on the straight and narrow?

No doubt their existing close relationships in the enterprise software world will come in handy, as Microsoft products are given access to a data layer that many have attempted to exploit, only to see LinkedIn continually reduce the availability of key data feeds in the LinkedIn APIs. Everyone from recruiters to sales companies have projects skimming through LinkedIn before the API were tightened in 2012.  The possible deep integration of Microsoft tools into the social network, could unlock everything from employee movement patterns, decision modelling, even corporate espionage.

Could direct competitors of Microsoft resist the use of LinkedIn by its employees? Who knows, but it could happen. Either way, Microsoft has purchased itself a huge advantage in the enterprise world.

No doubt  that there will be some integration of Yammer and LinkedIn, where Yammer could replicate private social networks amongst the broader public LinkedIn.

It’s exciting to see Satya start rolling the dice, and we may see more deals like this, as Microsoft isn’t short of a dollar and is keen to build relevance in the world amongst Google, Facebook and Apple. Let’s just hope this deal doesn’t go the same way as the Nokia deal.

© Scott Bales 2014. All Rights Reserved.