On Monday, June 13th, Microsoft
While certainly profitable for LinkedIn (which can anticipate moving the business more rapidly), the deal is a strong move by Microsoft, which is seeking to expand into social platforms. LinkedIn is one of the most widely used business social platforms; its users range from first-time interns, to full-time employees, to CEO's. Prior to being bought by Microsoft, LinkedIn had in turn acquired Lynda.com (an education company) for $1.5 billion last year; the platform currently has over 400 million users. By acquiring LinkedIn, Microsoft can step in and manage one of the key social networking tools so essential to today's economy. Now that the software giant has to compete with rivals like Google
However, despite the many advantages to the deal, Microsoft is still taking a risk in acquiring LinkedIn. LinkedIn may have a large user base-but how much more can it feasibly grow? Microsoft is paying approximately $260 per monthly LinkedIn user. If Microsoft wants to keep its shareholders happy, it will have to either find a way to add users to LinkedIn's platform at a faster pace or announce how it plans to generate revenue from the platform's immense stores of data. And there is yet another risk: Microsoft has a poor history when it comes to big tech deals. Its acquisitions of Skype and aQuantive, for example, have yielded lukewarm results at best. While both deals were made before Nadella took the helm, history has a habit of repeating itself; presumably this is why Nadella is holding LinkedIn as an independent company, to avoid the pitfalls of integration. Thus the deal may yet go on to yield good results under Nadella's management.