Microsoft-LinkedIn Deal May Prove Better Fit Than Earlier Buyouts

Considering there’s been no stockholder approval for the acquisition, such a thing is possible—even though it’s not particularly likely, given the unanimous approval by the boards of directors of both companies.

The obvious question, given Microsoft’s acquisition track record, is whether this would work. After all, Microsoft’s decision to buy Nokia so it could have its own phone manufacturing capability didn’t turn out well. In 2015, Microsoft took a $7.6 billion charge and in 2016 wrote off another billion dollars in value. Microsoft ended up selling its Nokia handset division for a tiny percentage of what it paid.

A similar foray into online advertising had a similar outcome, when Microsoft wrote off its $6.3 billion purchase of aQuantive just five years after it bought the company in 2007.

Better fit?

So why does the LinkedIn deal make more sense? First, remember that not all Microsoft acquisitions have tanked. Skype is doing just fine despite significant competition and Visio is now a standard part of Microsoft Office. LinkedIn, which isn’t a hardware maker like Nokia and which isn’t an unrelated service like aQuantive, could become well-integrated into much of the business software and online services that Microsoft sells to enterprises.

Buying LinkedIn saves Microsoft the cost and effort of building its own social network, which is something the company had to have thought about as it stood on the sidelines watching Facebook, Linkedin and Twitter grow rapidly on their own. Of these three biggest social media players, LinkedIn with its millions of business users is the best fit for Microsoft.

There’s more to this than just marketing, which is another reason it seems to have a good chance of succeeding: While Microsoft will certainly use LinkedIn’s member list as a marketing target, it also helps the company stay top of mind in all aspects of business relationships.

After all, LinkedIn is a primary job-seeking site for professionals. It’s the place where professionals people network. It’s a site where professionals can keep their names in front of movers and shakers in their field. The constant connection with Microsoft, even in the background, could be very powerful.

Just by being in the background, Microsoft’s LinkedIn connection may be especially powerful because the company will know what business leaders are thinking, what they are trying to accomplish, and how they plan to do it.

This will provide Microsoft a means of having the perfect online forum for its products and ideas. It’s hard to beat being in the right place at just the right time. LinkedIn could help Microsoft do just that.

Originally published on eWeek

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