Microsoft buying LinkedIn on Monday sent shockwaves through the tech world, raising several questions about the unusual merger.
Questions such as why did LinkedIn feel the need to sell now? And what does this mean for the future of both Microsoft and LinkedIn? And how will it impact social media marketing?
In this article, we try to answer these questions and more. Here are 5 things you need to know about this acquisition.
1. Why Did LinkedIn Feel the Need to Sell Now
LinkedIn CEO Jeff Weiner sent this email to LinkedIn employees explaining why this deal made sense for the company.
“When Satya first proposed the idea of acquiring LinkedIn, he said it was absolutely essential that we had alignment on two things: Purpose and structure. On the former, it didn’t take long before the two of us realized we had virtually identical mission statements. For LinkedIn, it was to connect the world’s professionals to make them more productive and successful, and for Microsoft it was to empower every individual and organization in the world to achieve more. Essentially, we’re both trying to do the same thing but coming at it from two different places: For LinkedIn, it’s the professional network, and for Microsoft, the professional cloud.
Both of us recognized that combining these assets would be unique and had the potential to unlock some enormous opportunities.”
2. What are the Essential Aspects of the Deal?
Microsoft acquired LinkedIn for a staggering $26.2 billion in cash. The largest professional social network in the world has 433 million members and 105 million of them are active monthly users as of 2016. LinkedIn also had 45 billion page views last quarter and 60% of the traffic came from mobile devices.
Under the terms of the deal, Jeff Weiner will remain the CEO of LinkedIn and will report directly to Microsoft CEO Satya Nadella.
3. What does it Mean for Microsoft?
Most experts believe that the LinkedIn deal makes a lot of sense for Microsoft because of the synergy between the two companies’ enterprise solutions while a few believe that the company may have overvalued the social networking company.
Microsoft’s acquisitions in the past have had mixed results. The recent Nokia fiasco springs to mind when you think of acquisitions gone wrong. However, LinkedIn’s 433 million members can be of real value to Microsoft who they can essentially convert into users of their enterprise products.
4. What Does the Deal Mean for LinkedIn?
If we were to talk of a clear winner in this deal, it’d be LinkedIn. Microsoft has already highlighted several key opportunities to grow LinkedIn. One of them is to make the newsfeed more “intelligent” to keep members engaged and connected. The other opportunity lies in Cortana which Microsoft intends to covert into a professional digital assistant.
Microsoft clearly sees LinkedIn as a leader in products and services in the business networking space.
LinkedIn’s stocks were languishing from the past few months and the announcement of this acquisition has given the stocks a much needed boost. Moreover, LinkedIn has been struggling to keep up with other social networks in terms of growth, active membership and cohesive advertising solutions. The Microsoft deal may give a new sense of direction to the company.
5. How Does it Impact Social Media Marketing?
As a social media marketing medium, LinkedIn has always taken a backseat to other channels such as Facebook and Twitter. Microsoft’s acquisition of the company may not change that in the short run. It remains to be seen how Microsoft’s other solutions such as Outlook, Skype, Cortana, Office, etc. will come in to play with LinkedIn.
Microsoft has more than 1 billion customers across all products. So if these customers are made accessible through LinkedIn, the potential reach of your marketing campaigns will be significantly higher than it is now.