In 2016, Microsoft outbid Salesforce in acquiring LinkedIn at a price tag of $26 billion. The LinkedIn purchase was rather intriguing, especially given that its share price had dropped substantially. Likewise, Microsoft paid a premium for the company that some had estimated to be inflated by at least 50 percent. With this data, it most certainly seems that Microsoft had ulterior motives for the business and professional networking site. However, now almost three years later, questions about its LinkedIn strategy still remain.
Without question, LinkedIn’s performance has improved. Recently, revenue generated from the company after the LinkedIn purchase have increased by 27 percent year-on-year. Total revenues from LinkedIn are also expected to reach $10 billion in 2021. But this revenue pales in comparison to those of other social media sites like Facebook. And operating expenses and costs continue to indicate that LinkedIn is operating in the red. Thus, it is reasonably worth taking another look at Microsoft’s LinkedIn strategy moving forward.
The Bird’s Eye View of Microsoft’s Potential LinkedIn Strategy
In other analyses, the LinkedIn strategy currently being pursued by Microsoft is a more generalized one. While specific objectives were set for the company, the LinkedIn purchase was actually more about building a more extensive ecosystem. In other words, Microsoft was most interested in adding to their portfolio of products and services to better compete in the industry. Therefore, the LinkedIn purchase represented an opportunity to better connect with other Microsoft offerings. These offerings included not only software like Office 365 but also the entire ecosystem’s suite, ranging from cloud services to search.
In this regard, perhaps LinkedIn was not intended to be an immediate cash cow for the company. Instead, the overriding LinkedIn strategy may have simply been intended to bolster Microsoft’s ability to compete with Google, Facebook and Amazon. But while this approach makes a great deal of sense, there is no reason Microsoft could not have had its cake and eat it too. There are several ways Microsoft could have fully capitalized more on the LinkedIn purchase over the last few years. And while many of these LinkedIn strategies are being pursued now, they have been certainly slow to develop.
Dropping the Ball – LinkedIn Strategy Areas Yet to Be Realized
To appreciate exactly how a LinkedIn strategy could boost Microsoft’s already impressive growth today, we should consider several areas. This case isn’t to say that investments aren’t being made in these areas, but that the pace is incredibly slow, to say the least. In modern times where startups can leverage new technologies to their advantage over incumbents, such delays can be costly. And given the premium Microsoft paid in the LinkedIn purchase, that is the last thing that should be tolerated. The following points reflect the most obvious opportunities that Microsoft’s LinkedIn strategy should be aggressively pursuing.
Advances in AI Capacities
Microsoft’s CEO Satya Nadella has recognized on numerous occasions his views on the future of artificial intelligence. In addition to espousing privacy concerns, he truly believes AI and deep machine learning will change everything. Notably, part of the LinkedIn strategy has been to utilize the platform to further develop Microsoft’s AI capabilities. But one only has to look as far as Microsoft’s search engine, Bing, to see the pace at which progress is moving.
Bing is now over 10 years old, and it continues to reflect a small share of search among consumers. Yet, Microsoft highlights Bing’s role in AI capacity development as one of its significant advantages. It is, therefore, reasonable to presume that this same gradual approach is being used in their LinkedIn strategy. While this case might be admirable from a privacy perspective, the approach could also prove to undermine market leadership.
Advances in Marketing Solutions
LinkedIn caters to business and professional communities. From professional networking to job boards, LinkedIn has always provided opportunities for marketing in the business sector. But part of its collapse before the Microsoft LinkedIn purchase was due to inefficiencies in these areas. Equipped with deep machine learning, AI, and other capacities, Microsoft should be seeking to enhance its marketing platform through LinkedIn. Given that businesses are already interested in their captive audiences, a LinkedIn strategy that better aligns message to the consumer is a no-brainer.
There is evidence that Microsoft is making acquisitions in this direction. LinkedIn recently purchased startup company Drawbridge for $68.7 million. Drawbridge provides an identity platform driven by intelligent targeting abilities of user journeys. So, this move suggests Microsoft’s LinkedIn strategy will soon involve better marketing solutions for users. Some have suggested that it will boost LinkedIn’s marketing solution revenues by as much as 46 percent annually. But how it will jive with Microsoft’s commitment to user privacy is unclear. In any case, these types of solutions should be considered as part of the LinkedIn strategy. These represent critical ways in which the LinkedIn purchase can actually create a new profit center for Microsoft.
Advances in Employee Engagement
One facet that was assumed after the LinkedIn purchase was that Microsoft products would instantly be promoted to LinkedIn staff. But even this transition has been reported to be slow in nature. With LinkedIn primarily being a business professional networking site, the opportunity to promote Microsoft’s entire suite is a given. Such should be part of an aggressive LinkedIn strategy. But Microsoft shouldn’t stop here. Instead, its LinkedIn strategy should leverage the core assets of the company to extend into other revenue areas. The most notable one would be that which is related to employee management and engagement.
LinkedIn had already acquired Lydia.com, which provides educational software for employee training and development. Microsoft also recently purchased Glint for $400 million as part of its LinkedIn strategy. Glint offers employment management tools, which could be highly attractive to business professionals in multiple areas. The reality of employee engagement and learning occurring through the cloud more and more has noteworthy implications for Azure as well. These are the types of advances that Microsoft should be pursuing aggressively in its LinkedIn strategy. And in fact, it is one that could revolutionize how organizations and professionals advance their skills and abilities.
Advances in Social Media
Compared to Facebook, LinkedIn obtains about a tenth of the annual revenues as a networking site. But the potential to expand social networking activities beyond professional ones is noteworthy. As part of an aggressive LinkedIn strategy, Microsoft could undoubtedly promote a social component to enhance social media efforts. Particularly from an ecosystem’s perspective, users may increasingly prefer to align with single entities for all activities, including social media interactions. The LinkedIn purchase offered this potential, but, to date, has not been realized.
It may be that Microsoft is moving too slow in this area as well. Notable startups are making strides in their social networking efforts that could hinder such a LinkedIn strategy. For example, Webtalk is a startup that allows better segmentation of social contacts while providing a one-stop social networking platform. Handshake is another one that is better able to leverage diversity data in helping connect students with employers. And Facebook is advancing WhatsApp Business to extend its business networking offerings. The longer Microsoft waits to leverage LinkedIn’s current networking strengths, the less potential it has for competing in social media.
Time for Microsoft to Take Bold Actions
When it comes to Microsoft, Nadella represents one of the most successful, innovative, and boldest leaders in the world today. His capacity to turn things around for Microsoft has been tremendous. But even the boldest leaders can make the mistake of not fully maximizing every opportunity they come across. And in terms of the LinkedIn purchase, it seems that strategic decisions have been slow to evolve. Though many logical LinkedIn strategy moves are occurring, the pace has been sluggish. And in the meantime, opportunities may be evaporating into thin air.
Indeed, critics have stated that Microsoft overpaid for the LinkedIn purchase. Others note the multitude of problems LinkedIn had before its acquisition by Microsoft. Regardless of whether these views are accurate or not, however, tremendous opportunities do exist for LinkedIn today. Perhaps more than any other company, Microsoft is well-positioned to take advantage of these directions. But the time has come for a bolder approach in Microsoft’s LinkedIn strategy. As a valuable resource that has tremendous leverage potential, LinkedIn could enable Microsoft to perform even better than already expected.