The big news of Microsoft’s acquisition of corporate network LinkedIn illuminated a few truths about social networks.
One is that social networks are still big business for the digital economy, as that $26.2 billion price tag shows. LinkedIn, even with 433 million members, is still a niche product—a corporate networking site—without any comparable competition. And Microsoft seems to have some interesting plans for the site. There was also competition from Salesforce.com which put in a rejected (and undisclosed) bid for LinkedIn.
Another is that social network companies are struggling. Twitter’s stock was down last week to $14 a share, the lowest for the year (it rebounded slightly after the Microsoft-LinkedIn announcement). The Microsoft-LinkedIn deal immediately prompted “who’s next?” questions, and many eyes turned to Twitter. With around 300 million users, Twitter, liked LinkedIn, does one thing well. Its membership rate, however, has slowed.
It’s hard to be an independent social media outfit these days. It seems likely that we will see more social media companies being sold and/or acquired by larger companies going forward.
(Meanwhile, Twitter is working of making itself more attractive to advertisers. For example, it recently launched a feature that lets advertisers link ads to emojis, such as food emojis that trigger an ad for a restaurant.)
What will MS do with LinkedIn? Integrate. As The Verge pointed out, Microsoft’s ubiquitous Office program still dominates that software sector, with 1.2 billion users. But the company doesn’t have a social media presence. With LinkedIn, the software giant has purchased access to all its members and their professional networks. The plan is to connect LinkedIn with seven Microsoft products, including PowerPoint and Word.
It will then create “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,” Microsoft’s CEO Satya Nadella wrote in a letter to employees. The company has Facebook in mind. Bill Gates told Bloomberg TV that they want LinkedIn’s professional newsfeed to be the primary info source for corporates. “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.”
What Microsoft has purchased is a large amount of data. That’s what your professional network is—and now MS could do something with the information. Like analyzing job searches and hirings and promotions. They’ll know who’s a member of which LinkedIn Groups (groups equals interests). Because people still tend to put personal info on LinkedIn, they’ll have access to that as well. This could give a boost to Cortana, the Windows 10 personal assistant. In fact, mere days post-LinkedIn buy announcement, Microsoft announced it’s buying mobile startup Wand Labs to improve its search and “conversation as a platform” capabilities.
As we’ve written before, digital networks are an important part of the future of work. And it seems that Microsoft thinks so, too.
For more on the business-boosting power of social networks, see In A Live Business, Social Gets Its MBA.