Microsoft snapped up LinkedIn for $26.2 billion in the largest acquisition in its history, betting the professional social network can rev up the tech titan’s software offerings despite recent struggles by both companies. History has shown [synergies] are very difficult to realize when two big companies combine, especially to the extent LinkedIn is remaining an independent fiefdom within the Microsoft empire.
The LinkedIn deal is a chance for Microsoft to reverse a terrible track record with acquisitions. Perhaps, Microsoft is seriously following the “eat or be eaten” strategy: $6.3 billion for ad business Quantive in 2007, $8.5 billion for video-calling tool Skype in 2011, $1.2 billion for business network Yammer in 2012, $9.4 billion for phone producer Nokia in 2014, $26.2 billion for Linkedin in 2016. Who’s next?
Additionally, Microsoft can also make the current users a little bit happier, for instance, connecting Office directly to LinkedIn could help attendees of meetings to learn more about one another directly from invitations in their calendars (If they prefer Microsoft calendar over Google or Apple). Or you can endorse each other's skills on their Skype feed during a meeting.
For Linkedin, the deal offers hope to renew decelerating growth as well as an exit for shareholders after the stock tumbled from a peak of $269 in February 2015 to as low as $101.11 last February. Ever had one of those annoying LinkedIn emails inviting you to "endorse" a contact for some skill or another? Perhaps LinkedIn chief executive Jeff Weiner and its founder Reid Hoffman deserve to be endorsed for salesmanship after today's deal.
Today’s work is split between tools workers use to get their jobs done, such as Microsoft’s Office programs, and professional networks that connect workers. There is no doubt that, the deal aims to weave those two pieces together but there is no scenario I can envision in which the combined companies will be better off. Until Microsoft can benefit from the imagined synergies, months of uncertainty lie ahead of Linkedin as the firm is restructuring and positioning itself within the established Microsoft brand. This uncertainty can benefit Linkedin’s competitors - one notable example is Designity, an online community for designers and artists, which has been growing rapidly.