LinkedIn has been acquired by Microsoft for three years. On December 7, 2016, Microsoft completed its $26.2 billion acquisition of LinkedIn, a white-collar social networking site. LinkedIn has made some business consolidations with Microsoft since the acquisition was completed, but as Microsoft has promised, the two companies have made slow progress in consolidating their businesses, and there are still plans that have not yet been worked out.
As a result, LinkedIn CEO Jeff Weiner speaks to the media at his office in Sunnyvale, California, in the fall of 2019. In the interview, he described LinkedIn’s progress at Microsoft.
Slow business consolidation plans after acquisition
Microsoft announced its acquisition of LinkedIn on June 13, 2016, the same day that Microsoft showed investors what it could do through LinkedIn in a presentation.
At the time, Microsoft Chief Financial Officer Amy Hood said the main goal of acquiring LinkedIn was to accelerate the growth of LinkedIn and the Office 365 and Dynamics 365 product lines.
Under the agreement, LinkedIn remains independent and Jeff Weiner remains in charge – Jeff Weiner took a position on Microsoft’s executive team and began reporting directly to Microsoft CEO Satya Nadella while retaining his CEO title. This is similar to microsoft’s $7.5 billion acquisition of Code Hosting and Collaboration Site GitHub in 2018.
However, Microsoft and LinkedIn are slow to consolidate their businesses at the moment, and Microsoft doesn’t want to mess up the biggest acquisition to date. It also suggests that under Satya Nadella’s leadership, Microsoft’s approach has changed, as acquisitions have failed in the past:
In 2012, Microsoft announced a $6.2 billion writedown on the value of its goodwill, largely related to the $6.3 billion acquisition of digital advertising agency aQuantive in 2007, the biggest deal at the time, and Microsoft reported its first-ever quarterly loss as a result of writedowns.
Microsoft posted a quarterly loss in 2015 after it bought Nokia’s equipment and services business for $9.5 billion, but spent $8.3 billion on restructuring its mobile phone business.
Both agreements were signed before Satya Nadella took over from Steve Ballmer as CEO in 2014. Satya Nadella, who is also one of the executives responsible for Microsoft’s advertising campaign after the deal with aQuantive, said of LinkedIn:
Of course, we will learn from the past.
Acquisition of LinkedIn optimistic
LinkedIn is understood to be a special asset, and Salesforce, which has been focusing on enterprise software services, wants to buy it, so a months-long bidding war has ensued. After the failed bid, Salesforce CEO Marc Benioff said Microsoft’s bundling of LinkedIn data with other software products was anticompetitive.
Three years after the deal ended, Marc Benioff’s biggest concern has not materialized. Overall, LinkedIn remains independent of the rest of Microsoft.
For consolidation, Jeff Weiner says it’s too early:
We have a membership-first policy, so it’s all about ensuring that members trust us. Microsoft has a very similar philosophy about how to protect customer data, and is very thoughtful about how to deliver the product correctly, ensuring that we deliver a great experience for our members. In view of this, we have conducted many integration experiments.
But there is no doubt that product consolidation was one of Microsoft’s original ideas for acquiring LinkedIn. Microsoft has presented six prospects for the integration of the two companies’ products:
LinkedIn’s sales navigation and the integration of Microsoft Dysnamics sales software are now available. In addition, users can use Sales Navigator data in Microsoft’s PowerApps and Power BI tools.
Display details of LinkedIn members in the Windows and Office apps. Microsoft has made progress in this area, and LinkedIn’s integration will be available in Android’s Outlook app by 2020.
LinkedIn’s Smart News Collection will use Office applications to get information that is not yet available, but LinkedIn has begun to use services such as Microsoft’s translation to enhance feeds.
Microsoft Cortana Voice Assistant notifies LinkedIn users of information on some social networks that have not yet been rolled out.
Tools that business managers can use to better understand employees’ work have not yet been rolled out.
The content that provides the LinkedIn Learning section in Office software is not yet available, but Jeff Weiner says it makes sense to bring learning to Microsoft Office software.
In addition, jeff Weiner also mentioned several “incredibly exciting” Microsoft products to be integrated, including Active Directory and Skype, on the day of the announcement of the acquisition with Satya Nadella.
On the day of the acquisition, one of Microsoft’s key products did not appear in Jeff Weiner’s integration plan, which is Microsoft Azure Cloud Computing Services (Microsoft Azure and Amazon AWS are currently the top global market ers in cloud computing). Earlier in 2019, however, LinkedIn said it would adopt Microsoft’s cloud computing services after relying on its own infrastructure for years.
There is no doubt that this shift on LinkedIn will lead to more opportunities for product integration. As Jeff Weiner says:
We’re building infrastructure on Microsoft’s cloud computing platform so that Microsoft users can combine their linkedIn data and their employees’ LinkedIn data as enterprise data in a private, secure, and trusted environment. Once this data is consolidated, it will become more valuable, and organizations will be able to use the data to run analytics and queries and do some very interesting things.
Using LinkedIn, Microsoft recently deployed a new version of the company’s directory called Who Plus. According to Jeff Weiner, LinkedIn can also turn this integration into a product for non-Microsoft employees.
At the same time, LinkedIn profile information can be synced in more Outlook applications, including Android, to better integrate information in Outlook, says Jeff Weiner:
Once we’ve identified this, it’s possible to extend it to other Office applications, especially as the collaboration capabilities of Office applications grow, to see who users are connecting with, who they’re connecting with, who they’re connecting with, and who they’re connected to based on skills, knowledge, knowledge, and so on. I think it can create a lot of value for people.
Jeff Weiner says the team is still considering how best to integrate LinkedIn into Windows, one of the ideas Microsoft first came up with in 2016, including features of news services and the ability to send LinkedIn to Windows users. Notice.
LinkedIn little changed, but revenue grew steadily
So far, LinkedIn doesn’t seem to have changed much for users.
At the same time, LinkedIn’s user base continues to grow – with 660 million members, up 52% from the time of the acquisition – and LinkedIn earned $6.75 billion in fiscal 2019 (as of June 30, 2019), up 28.4% year-on-year.
However, Microsoft’s revenue growth has not exploded since 2018, growing between 25% and 37%. When Microsoft announced its acquisition of LinkedIn, Microsoft’s revenue growth slowed significantly.
Jeff Weiner says LinkedIn has outperformed expectations over the past three years:
I think that because we’re part of Microsoft, we can focus more and more on the long-term outlook than we’ve been about quarterly short-term performance as we have in the past. In the first few quarters after the acquisition, our revenue growth continued to slow, then stabilized, and then began to pick up significantly.
Jeff Weiner also mentions:
If we were still an independent public company, how would Wall Street react if revenue growth slowed? How would this affect the company? How would it affect our employees? It’s hard to say. However, these things don’t happen, so we don’t have to spend too much time thinking about it.
It’s worth noting that LinkedIn doesn’t contribute much to Microsoft’s revenue. LinkedIn’s operating loss widened by $63 million to $987 million in the fiscal year ended June 2018, compared with Microsoft’s total profit of $16.57 billion in fiscal 2018, compared with Microsoft’s total profit of $16.57 billion in fiscal 2018. than, just a fraction. In addition, Microsoft did not release an update on LinkedIn’s profit stakes for fiscal 2019.
In addition, Jeff Weiner has said that LinkedIn can improve profitability through a more advanced billing system, or work more closely with Microsoft’s sales team.
How the future will be a matter of deep integration with Microsoft’s products and services and contributing to its revenue will be a question to consider for the white-collar social networking site, which has been “stocked” for three years.