On Monday, tech giant and software producer Microsoft announced its most expensive deal to date. The company is set to purchase LinkedIn, a social networking site, at $196 a share for a total of $26 billion.
The deal has become the subject of debate: will Microsoft’s costliest acquisition result in another success or will it flop? And what’s driving Microsoft’s interest in the platform? Here’s a survey of some of this week’s reactions to the deal.
Cloud + Network
The price of the buyout and the reasons behind Microsoft’s purchase have caused speculation and, in some cases, befuddlement in the tech news world, despite what Microsoft CEO Satya Nadella has said about the tremendous ability to combine Microsoft’s cloud technology with LinkedIn’s network.
LinkedIn CEO Jeff Weiner said that Microsoft will allow LinkedIn to remain a virtually independent entity. In a blog post on LinkedIn he said that the two companies have very similar missions: connecting professionals so that they can achieve more. Microsoft uses the professional cloud while LinkedIn uses the professional network to work towards that goal.
Price too high?
But some speculators, like Slate’s Will Oremus, senior technology writer, remain skeptical.
“(Microsoft) announced Monday that it’s acquiring LinkedIn for $26.2 billion, which is almost 50 percent more than the stock was worth when the markets closed Friday,” he said in a blog post on Slate’s website. For the company to make a profit on the most expensive deal they have ever made, they will have to find a way to harness LinkedIn’s potential.
Oremus said there is, however, an enormous opportunity for the businesses to grow, if Microsoft is able to absorb LinkedIn’s social graph, the connections of relationships in the social network, into its own software without any bumps.
This is the largest acquisition in Microsoft’s history and perhaps an attempt to reclaim its position as No.1 in the technology market, The New York Times said in an article, noting the professional focus of both companies. The Verge states the obvious, somewhat more bluntly: “a social graph allows Microsoft to keep Facebook and Google out of the workplace.”
The Times points out that this isn’t the first big purchase Microsoft has made, though it is by far the largest. In 2011, Microsoft purchased Skype for $8.5 billion. Skype has since grown from 170 million users to more than 300. Other large purchases, like that of Nokia and aQuantive, did not fare as well.
The Wall Street Journal shares some of the views of other skeptics, suggesting that LinkedIn has not grown into anything else since its beginning as a tool for finding jobs and recruiting, it said in an article (paywall).
Synergy with Office, user base
But while there is risk, there is also potential in the deal.
“LinkedIn’s users are, arguably, Microsoft’s core demographic,” the WSJ article said. “They also offer Microsoft something it has long sought but never had—a network with which users identify. Microsoft needs to persuade LinkedIn users to adopt that identity, and use it across as many Microsoft products as possible.”
Perhaps the most optimistic about the deal is Forbes’ contributor and social and business technology expert, Rob Salkowitz, who said in an article that LinkedIn can fill in the “giant holes in the areas of expertise location, contact management and content publishing.”
TechCrunch, meanwhile, looked at a number of ways LinkedIn can be integrated into Microsoft’s Office suite of products, and called out the natural synergy between Office products and continuing learning ? drawing on the learning curriculum LinkedIn brings via last year’s acquisition of Lynda.com. Integrating newly-acquired services into Office365 is not without precedent. Microsoft acquired Skype in 2011 and Yammer in 2012, both of which are now seeing integration into products.
Subject to Approval
While the WSJ points out that LinkedIn’s shares fell to nearly half their price in one day this past February, this week’s news of the acquisition sent LinkedIn’s stock price soaring; the deal is still subject to regulatory approval, and according to the Washington Post, should be completed by the end of the year.
Finally, Postlight co-founder Paul Ford breaks out a half-serious, half-in-jest list of “9 Things Microsoft Could Do with LinkedIn.” LinkedIn inside of Minecraft, anyone?
Danika Stahl is a summer intern at Mindset Digital.