This is the tech giant’s first major acquisition under the leadership of Satya Nadella, the India-born CEO of the company, which has its headquarters in Redmond, Washington, US. Nadella took over from Steve Ballmer in 2014.
Founded in 2002, LinkedIn, whose headquarters are at Mountain View, California, is professional social networking platform with a user base of 433 million. In 2015, the company reported revenues close to $3 billion and operating income of $780 million.
For Nadella, it is one of the biggest strategic moves which will help Microsoft sell its solutions such as Office 365 and Dynamics to LinkedIn’s mostly enterprise-focused users.
It also reflects how the social platforms are becoming important in the merger and acquisition strategy of global tech giants. In 2014, social networking major Facebook acquired instant messaging platform WhatsApp for $22 billion, further cementing its position as the leader in the global social-networking space.
“The LinkedIn team has grown a fantastic business centered on connecting the world’s professionals,” said Nadella in a statement. “Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet.”
The acquisition of LinkedIn will help Microsoft expand in India too, where the company has a user base of 35 million — second only to the US.
Last year, LinkedIn had piloted a localised product in India targeting college students so that recruiters who came for campus placements could see their profiles in advance.
The registration by candidates also helped LinkedIn map their skills, so that it could market e-learning programmes from Lynda, the online learning firm it had acquired early that year.
LinkedIn is now taking the product built by its team in India to other places.
It has an 800-member team in Bengaluru and is headed by Akshay Kothari, who came to LinkedIn with its acquisition of Pulse, the newsreader application it bought in 2013.
Kothari is expanding his team in the country to build products to tap more users looking out for white collar jobs.
According to various estimates, average time spent monthly on the portal by the Indian users is around 17 minutes. With a huge population base, especially under the age group of 25, LinkedIn is expected to create greater impact.
“In this interconnected world, companies
are going to leverage each other's platforms to sell all their services to different consumers. This is a global phenomenon, and it is true for India as well,” said Hemant Joshi, Technology, Media and Telecom Leader at Deloitte India.
For Microsoft, which long has used India as a talent base for its products and solutions, the LinkedIn platform would help cement relationships with business users and provide a huge customer base from which it already earns huge annuity revenue.
Post the completion of the acquisition process, Microsoft said, LinkedIn will continue to operate as an independent entity retaining its brand identity and culture, Jeff Weiner would continue to remain as CEO of LinkedIn. For financial reporting, LinkedIn’s financials would be reported as part of Microsoft’s Productivity and Business Processes segment.
Microsoft’s shares were trading at $50.55, a drop of 1.79 per cent over the previous trading day’s end. However, the shares were seen recovering after an initial drop.