Just a few weeks ago, Microsoft made company history by announcing a $26.2 billion LinkedIn acquisition.
The deal is Microsoft’s largest to date and has sparked nonstop speculation in its wake. What changes will be made to the Internet’s largest professional networking interface?
As the deal will not officially close until the end of 2016, we’re left with plenty of time to hypothesize about why Microsoft made the move it did and how LinkedIn users stand to benefit.
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Microsoft’s Past Successes (And Failures)
The LinkedIn buy is far from the company’s first acquisition. Microsoft has bought more than 150 other companies with varying degrees of success (and arguably dodged a $44.6 billion bullet when the 2008 Yahoo acquisition fell through). Some of the more notable purchases include the ultimately unsuccessful 2013 Nokia deal and the contrasting 2014 Minecraft buy, whose sales recently topped 100 million.
Microsoft CEO Satya Nadella maintains that the LinkedIn deal will follow the latter trend of success, citing plans for the growth acceleration for LinkedIn founded in Office 365 and Dynamics as well as the two companies’ “pursuit of a common mission centered on empowering people and organizations.”
Microsoft’s greatest missteps as a company have stemmed from the decision to ignore user feedback. The most famous example is that of Clippy, the animated bane of any Word user’s existence from 1996 to 2007. Early focus group data for Clippy was generally negative, but the engineers behind the software made the executive decision to ignore tester responses.
The little office assistant has since been parodied, ridiculed, and even included in TIME’s “50 Worst Inventions” list in 2010 not exactly Microsoft’s proudest moment. As Microsoft moves forward with changes to LinkedIn, the company would do well to learn from mistakes of the past by prioritizing its users and what they want.
Changes in Store for LinkedIn
LinkedIn was admittedly not having the best year leading up to the June 13 announcement. Shares decreased 42 percent over the course of 2016 but rose 50 percent after the transaction was made public. This shift bodes particularly well for LinkedIn, but should offer some advantages to Microsoft as well. Market Realist holds that the transaction was a win-win for both companies, as Microsoft will open up “a wider business community” for LinkedIn and hopefully also resolve the issue of a stagnant user base in the coming years.
Amid all the changes in store, Microsoft does plan to retain LinkedIn CEO, Jeff Weiner. The consistency of leadership is promising, as Microsoft will be keeping the person familiar with the company’s objectives rather than introducing the uncertainty of new management.
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A Wealth of Integration Potential
Integrations are key here, as the potential for productivity and streamlined business communication is significant when one considers the plethora of tools Microsoft and LinkedIn have to offer. For example, imagine that you’re a businessperson in need of a web developer. At the height of integration, Microsoft could utilize its access to your Outlook emails, LinkedIn connections, and Skype chats to create a connection directory of sorts.
The list could include direct connections, potential connections with mutual contacts, and individuals who work with someone of your target skill set and could make an introduction. Perhaps Cortana could even send out a project scope to the relevant contacts on your behalf as you initiate the hiring process.
This fusion of data could radically simplify the search for customers, job and employee prospects, vendors, and more. Of course, Microsoft has yet to release the specifics of its plans for LinkedIn. But anyone can see that neglecting integration possibilities would be a missed opportunity.
The Cautionary Tale of Yahoo and Tumblr
At this stage, Microsoft would also do well to note past acquisition mistakes of others. After Yahoo CEO Marissa Mayer spearheaded the $1.1 billion Tumblr acquisition in 2013, a slew of speculative articles overtook the Internet as experts began to hypothesize the possible outcomes. Yahoo’s high expectations were embarrassingly transparent, with Mayer herself positing that the acquisition would promptly “grow Yahoo!’s audience by 50 percent to more than a billion monthly visitors,” as well as increasing traffic “approximately 20 percent.”
Three years later, neither company has much to show for the buy and Mayer’s lofty $100 million revenue goal is still unmet. Most significantly, Yahoo announced a $230 million Tumblr write-down in February likely a result of the ill-advised decision to merge the companies’ ad sales teams. Perhaps the issue (or one of them) lies in publicizing unrealistic goals before having the chance to determine whether such objectives are even viable. In the case that the company fails to meet its own expectations, employee morale, and user support both end up taking a hit.
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Looking to the Future
All in all, it will be genuinely interesting to see the route that LinkedIn takes in this new step with Microsoft. The social network’s relevance has waxed and waned over the years, but still boasts a significant 433 million users. If both companies are careful to play their cards right, professional networking and business productivity could be taken to entirely new levels worldwide.
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