By Tina Irgang
Microsoft this week announced that it had paid a staggering $26.2 billion for professional networking site LinkedIn. Satya Nadella, CEO of Microsoft, argues the deal could change what kinds of people you can connect with, and what you’re able to learn about them before you do.
Microsoft’s past acquisitions have been a mixed bag. In 2013, the company acquired Nokia’s smartphone business, which was an unmitigated disaster, forcing Microsoft to write off the entire $7.2 billion it spent on the deal, according to Business Insider. The company’s 2011 acquisition of Skype has proved a bit more successful, with the web-based calling service continuing to grow. However, it’s not clear that the addition of Skype has actually made a big difference to Microsoft’s bottom line, according to The Guardian.
Some experts believe the new LinkedIn deal could be similarly unproductive. One reason is that LinkedIn’s business model is somewhat predicated on job growth, which hasn’t been great, notes VentureBeat.
Microsoft also hasn’t put forward a compelling argument about what it can bring to LinkedIn that will help it thrive — a key predictor of acquisition success, argues the Harvard Business Review.
However, not everyone feels that way: The Wall Street Journal calls the acquisition “a very savvy move,” and says: “LinkedIn’s users are, arguably, Microsoft’s core demographic. 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.”
How can Microsoft and LinkedIn connect?
In a presentation on the deal, Microsoft CEO Nadella argued that the acquisition of LinkedIn would break down silos that stand in the way of professionals’ success. For example, the information traditionally listed on a LinkedIn profile could also be made available in Outlook, Skype and the entire Microsoft Office suite.
In addition, Microsoft is planning to leverage its virtual assistant, Cortana. “In the future, Cortana will know your entire professional network to connect dots on your behalf so you stay one step ahead,” according to the presentation. For example, if you have a meeting coming up with someone in your LinkedIn network, Cortana will be able to alert you what you have in common, such as an acquaintance or an alma mater, and will be able to share your meeting presentation in advance.
In addition, since Microsoft and LinkedIn both offer CRM products, merging their data could really make a difference for sales professionals, notes The Wall Street Journal.
The flip side of this, of course, is whether you want to share everything LinkedIn knows about you with Microsoft, and vice versa — especially, as we’ve already noted, both Microsoft and LinkedIn have CRM products to think of.
“Microsoft will need to invest heavily in how its applications use LinkedIn’s data without compromising a sense of privacy,” notes MediaPost.
There’s also a question about philosophical differences on privacy. LinkedIn tracks its users based on their data, both “on and off the service,” while Microsoft has carefully cultivated a reputation of protecting users’ information, notes The Huffington Post.
Ultimately, the merger’s success is likely to hinge on that old question: Are customers willing to overlook privacy concerns in favor of convenience? The answer is probably yes.
Tina Irgang is the managing editor of SmartCEO magazine and SmartCEO.com. Contact her at firstname.lastname@example.org.