The all-cash deal is expected to close by the end of the calendar year, and will be one of the largest acquisitions in tech business history.
The acquisition feels emblematic of this increasingly financialized moment in the tech industry. Tax-avoidance strategies have left tech giants with never-before seen fortunes parked offshore, seemingly in a bet that some day a government will offer the company a discounted tax rate if they repatriate the funds. In the meantime, the companies engage in all sorts of weird behavior, like borrowing billions in the US to finance stock buy-backs, or, well, making ungodly huge acquisitions.
It also represents a certain diversification strategy for Microsoft, which, despite its video-games business, is still primarily a firm that provides utility software to businesses. Linkedin is, on the one hand, a service business that's very different to Microsoft's existing enterprise market; and on the other hand, a service that sells into businesses that Microsoft has a lot of experience with.
However, it also poses a conundrum for Linkedin, which has enjoyed much of its success with HR departments and recruiters by being seen as an honest broker of talent and jobs that didn't itself compete for those jobs or people. If you're a Microsoft competitor, will you trust that Linkedin will be sending you the best talent, or suspect that its parent company is creaming off the top and leaving its competition with second-best? Moreover, will, say, Facebook or Google be willing to risk leaking strategic information about upcoming business initiatives by communicating about them over a Microsoft-owned product?
The deal will see LinkedIn retain its brand, culture, and independence. Jeff Weiner will remain as CEO of LinkedIn, but report into Microsoft CEO Satya Nadella. Reid Hoffman, co-founder and controlling shareholder of LinkedIn, and Weiner both support the acquisition.
Microsoft will acquire LinkedIn for $26.2B [Sebastian Anthony/Ars Technica]
(Image: geralt/Pixabay, PD)