Microsoft buys LinkedIn for $26.2 billion.

Why Would Microsoft Buy LinkedIn?

Many of our readers will have heard by now that Microsoft has purchased LinkedIn for a whopping $26.2 billion in cash.  Most deals I’ve seen recently with these types of values and by these types of tech companies tend to involve some level of cash but also equity.  This unto itself is telling of the value they put in it.  But why?

One of the earliest comments out of the gate has been the obvious synergy between the two regarding target audience.  Microsoft is heavily invested in enterprise software and services and the LinkedIn social network is obviously a good fit on that front.  This is reinforced by Microsoft’s Satya Nadella who said, “It’s really the coming together of the professional cloud and the professional network.”

Alright, that makes sense but $26.2 billion for it?  Does Microsoft really believe that the sales they will garner from this network will be worth that? I find that highly unlikely but it doesn’t have to be … there’s a lot of meat on those bones.

Let’s consider this, Google has invested massive resources into understanding how their users are connected, what they want, what they do and essentially – who they are.  In one acquisition Microsoft has gained access to this data for some of the main decision makers and wealth holders.  And they don’t just have access to the data on the individual such as their employment history, what people endorse them for, etc. but they also know how that person is connected to others and who the connected with first.

In the interview below we hear a statement from Satya that exactly makes this point when he references himself as a publisher and user of LinkedIn.  He has a profile and has his experience (albeit limited in his case), education, connections and who he follows.  We can also learn who is interested in what Satya has to say from who his 291,441 followers are (note to Microsoft: you’ll find my name in there).  And now the 2 minute interview on the acquisition:

With that behind us let’s again start to consider what this acquisition really means.  To do that we need only reference Google+.  Do you have a gMail account?  Then you have a Google+ page.  Do you use Analytics? then you have a Google+ Page.  I know our readers known this already however I’m sure you get where I’m going … if you have a Microsoft login: you’ll have a LinkedIn profile.  Have a LinkedIn profile? Then soon you’ll have a Microsoft login.

This is the bridge between the desktop and enterprise user and their life.  If the same login I use to unlock my computer and all it knows about me is connected to the largest professional social network with all it knows … that is a lot of valuable information Microsoft now has.  Will this help them market their software? Sure, but I doubt to the tune of $26.2 billion anytime soon. I have a strong suspicion that they’ll be using this information for other advertising mechanisms.  To illustrate the power this would have I need only ask you one questions, “Would you use Bing paid search if you know you could target your ads across both search and LinkedIn based on a person’s position within a company?”  Of course you would and so would I.

To me this is a major game-changer in the world of paid search.  Not today but it will be tomorrow.  When these properties are combined in the coming months we will see the power of Bing paid search skyrocket.

Oh, and they’ll probably sell some extra software too.

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