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Saturday, 18 June 2016 15:55

Microsoft and LinkedIn are a good fit Featured

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There has been lots of commentary about LinkedIn being acquired by Microsoft. Some of it is bizarre and suggests Microsoft will spy on the professionals that use it, while others say that the acquisition will allow LinkedIn to be even more pervasive via Microsoft products. Here is a good weekend read!

One thing is sure – if Microsoft is spending US$26.2 billion, it must be very sure that there is value in the deal that will grow over time.

I have collected a range of comments and suggest you make up your mind. I will tell you upfront that after spending a few hours researching this, I don’t see any downside. In fact, I suspect that Microsoft is a better fit for the long-term future of LinkedIn than its current owners. I am not saying LinkedIn’s old public shareholder owners are bad, but Microsoft has a lot more reputation at stake.

Let me also say that I see the dangers of LinkedIn as a platform. As a former chief executive of the Public Relations Institute, I was exposed to the shady side where "LinkedIn lurkers" trolled for Invitations, where a whole economy of data miners (mainly from under-developed countries) had grown to sell you linkers or market to them, and where the more you exposed yourself, the more you were spammed with offers, white papers, etc. I removed all information from my profile, and it has taken more than a year to slow down the avalanche of rubbish.

The deal

LinkedIn has 433 million members growing at around 20% per year. Of that, about 105 million are unique, active, monthly members. Some 60% use mobile to access the site, and it has two main raisons d'être – to link and inform professionals, and to act as the world’s largest recruitment database. Pretty well everything else that happens in the LinkedIn engine is member-driven.

Microsoft is purchasing it outright. I guess that means LinkedIn shareholders are going to get very large cheques.

LinkedIn’s stated intentions

LinkedIn chief executive Jeff Weiner gave an emotional speech to his employees. The full transcript is here.

It’s a long read, but one thing stood out. Weiner said technology, and robotics, in particular, was accelerating in a way that millions of workers would be displaced from their jobs. These employees would need new opportunities and new connections to reinvent themselves, and LinkedIn was perfectly positioned to help them do that  with Microsoft’s help.

"The world needs what we do more than ever before. That dystopian future where robots replace people, that has been predicted in science fiction for decades, it’s happening. It has begun. Whether it is the displacement of individuals and people by new technologies, whether it is the widening skills gap, whether it is the growing problem with youth-based unemployment, or record levels of socioeconomic stratification, creating economic opportunity will be the defining issue of our time.

Microsoft’s stated intentions

It has stated that it can accelerate the growth of LinkedIn (yes it has 1 billion+ users so expect cross-promotion) and an oblique reference to Microsoft Office 365 and its Dynamics CRM. We can only speculate on the latter. I suspect it will see LinkedIn built into Office 365 products like Outlook, Word and more, to enable you to access it without leaving your "productivity" tool.

Microsoft CEO Satya Nadella has shown a new spirit of openness and transparency that, over the last couple of years, has completely changed Microsoft from a reviled corporate behemoth and public enemy to one focused on "empowering every person and every organisation on the planet to achieve more". It is not so balance sheet-driven as it was under Steve Ballmer et al.

He has penned a letter to Microsoft and LinkedIn employees on its intents, and that is "evidential" – he and Weiner will be held accountable.

"Think about it: How people find jobs, build skills, sell, market and get work done and ultimately find success requires a connected professional world. It requires a vibrant network that brings together a professional’s information in LinkedIn’s public network with the information in Office 365 and Dynamics."

"This combination will make it possible for new experiences such as a LinkedIn newsfeed that serves up articles based on the project you are working on and Office suggesting an expert to connect with via LinkedIn to help with a task you’re trying to complete. As these experiences get more intelligent and delightful, the LinkedIn and Office 365 engagement will grow. And in turn, new opportunities will be created for monetisation through individual and organisation subscriptions and targeted advertising."

Microsoft co-founder Bill Gates has had an epiphany, too, over the years, and his stocks are somewhere up there with any other demigod – he is very supportive of the deal.

“This professional feed in LinkedIn, that is how I want to learn about my career, my company, my industry, and I’m going back there,” Gates said in an interview with Bloomberg TV’s Erik Schatzker. “If we can make that as valuable as the Facebook feed in the social world, that’s huge value creation, and that’ll happen over a period of years.”

In a tech sense, bigger is better – it is actually get big or get out!

Let’s not forget that:

  • Facebook bought Instagram (US$1 billion) and Whatsapp (US$19b);
  • Google has snapped up so many companies that it had to change its name to Alphabet to accommodate 26 of them!;
  • Hardware companies like IBM, HP, Dell, Lenovo and more seem to acquire companies literally every other week; and
  • All start-ups want to be acquired

The Internet has broken down trade barriers, and the world's 7.4 billion people are now the market.

What industry is saying

I have received many releases on this but the following two encapsulate them all.

Shyam Oza, senior product manager at AvePoint

He said: “For many people, the acquisition of LinkedIn by Microsoft sounds like a bad bet or something as elementary as a data ‘land grab’. I think the issue is that many analysts and commentators are far too out of touch with the industry and its direction.

"Microsoft has access to billions of users and gathers telemetry on everything they do from how many items they pin to the taskbar in Windows to how long they spend on a VoIP call on Skype.

"Microsoft doesn’t need more data, and it doesn’t need subscribers via LinkedIn. Microsoft is taking a defensive posture against Box, Jive, Slack, and Google by securing themselves in the enterprise social sector.

"They now control the largest professional social network in the world and by offering enterprises the ability to have a seamless internal and external social network, they have taken steps to block out some of the recent threats to their title. If the others want to play this game, they now have to play by Microsoft’s rules and use their platform/APIs, or take a very high-risk high-cost chance and build/expand their social capabilities.

"I also think Microsoft has learned a lot after their Yammer acquisition and will be treating this more like their Skype purchase. The end user side will remain unchanged while backend integration will be king." 

Sarah Adam-Gedge, managing director, Avanade Australia 

She said: "Since the news broke, we’ve seen a good deal of speculation around why Microsoft and LinkedIn have agreed to come together in the largest acquisition in Microsoft’s history. The acquisition is significant not just because of its scale, but because of what it signals for the future workforce and how organisations will operate.

"This marriage of Microsoft and LinkedIn makes a lot of sense in our increasingly hyper-connected world. Businesses need to move away from 'walled gardens', with closed platforms that prevent collaboration with outside parties, customers or even competitors. The deal shows that it’s truly time to go borderless.

"Digital ecosystems and borderless platforms create opportunities for businesses to take advantage of a 'mesh of interactions' that connects people, things, algorithms and other entities. This digital mesh generates more value than the sum of its parts, advancing entire industries and ecosystems, not just individual companies.

"Clearly, in joining forces with LinkedIn, there is an opportunity for Microsoft to architect a truly digital ecosystem – bringing together access to data and context to make interactions truly personal, available and impactful. In a use case as simple as bringing that context into a CRM system to make a customer interaction more personal, Microsoft’s acquisition of LinkedIn has the potential to enable not just Australian businesses and professionals but those around the world to embrace the digital workplace.

"The acquisition announcement validates that digital transformation is really about people. On the surface, we see technology as the driving force, but it’s really humans who are at the heart of digital. While we fully expect some jobs to become automated by robots and other technology in the near future, the human potential will always be the heartbeat of business. When you bring together the power of connected people and business data and insights, you can create a unique experience. And sustainable differentiation is only possible through a unique experience."

As Nadella pointed out in his email memo to Microsoft employees: "LinkedIn is about a connected professional world. Microsoft Office 365 is a connected platform of tools, business insights, and knowledge to enable people to do more with technology. At the centre of both of those platforms is people – people are the common denominator and 'how' the digital transformation truly has an impact. Digital transformation is made possible by the power of the human network.

"However, digital transformation comes with considerations. We also must remember that the more data we have, the more thoughtful we must be about the ways in which it is used. Innovation of any kind carries risk, which is why digital ethics is the cornerstone of the digital economy.

"Fundamentally, digital ethics is a concern about transparency, security, privacy and trust. As digital innovation enables the business to reach new heights and connect more intimately and rapidly with customers and workers, fostering these different aspects of digital ethics is mandatory."

Avanade looks forward to working with Microsoft and LinkedIn to help clients connect people, data, and things in ways that make them more productive, efficient and able to do things never before possible – and to be thoughtful about how and when to do it.

Comment

Yes, I know some of you have long and bitter Microsoft memories and will never believe a leopard can change its spots, but there are far worse companies than Nadella’s Microsoft Mark 3.

The only downside to everything I have read is the dreaded ‘A” word – advertising. Money makes the world go round, and that is no different to what we are increasingly bombarded with every day via Apple, Google, and more.

The result could have been worse. Not saying that other suitors for LinkedIn are worse but Salesforce was a strong contender and it is all about gathering more data. It has been very aggressive in acquiring machine learning and e-commerce software platforms. I suspect that this where any negative comment about Microsoft Dynamics CRM (a competitor to Salesforce) is coming from.

The real issue is not "who buys what" but digital ethics – the cornerstone of the digital economy and, more importantly, trust. Governments at all levels need to look at a unified bill of digital rights and privacy (sample here) to protect us all. Given the work being done in Europe, I don’t think it will be long before we all know how our data is used and what we can do about it.

I, for one, trust Microsoft with the stewardship of LinkedIn. People who do not can very easily remove their LinkedIn account following the instruction here. Later we all can sit around the fire and chat about conspiracy theories, survivalism, alien abductions, hunting, shooting and fishing, and walking softly to leave a very small digital footprint.

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Ray Shaw

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Ray Shaw ray@im.com.au  has a passion for IT ever since building his first computer in 1980. He is a qualified journalist, hosted a consumer IT based radio program on ABC radio for 10 years, has developed world leading software for the events industry and is smart enough to no longer own a retail computer store!

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