Microsoft made a shocking announcement on Monday, June 13, revealing that it has made a definitive agreement to acquire LinkedIn for $26.2 billion.

While Microsoft will now own the social network for work professionals, LinkedIn will continue to be its own brand and keep its independence. However, CEO Jeff Weiner will now report to his new boss, Microsoft CEO Satya Nadella. The two will work together, combining Microsoft's professional cloud with LinkedIn's professional network.

But did Microsoft really just strike gold with this acquisition or will it be courting disaster?

The Pros

There are a few reasons why Microsoft may have just made a really sweet deal. First of all, numbers don't lie and LinkedIn's numbers are pretty impressive. With enhancements like a better newsfeed for business insights and a new version of its mobile app, membership has continued to increase with 19 percent growth year over year to now include 433 million members globally. The platform has more than 7 million active job listings with more than 105 million unique visiting members each month.

While these numbers seem great, growth has been slow in 2015. With more members added, users were looking at fewer pages on the site, which also means that advertising has also been slow. In fact, LinkedIn's ad business only grew about 20 percent for Q4 year over year according to a report in February compared to the 56 percent growth during the same quarter the year before. The acquisition could fix this by getting more Microsoft users (it has over 1 billion) onto LinkedIn and thus seeing the ads, or ads appearing on Microsoft's Office products.

With slow growth, stocks were also down for the social network, which means Microsoft is able to buy the company for $196 a share compared to $270 a share early last year. So talk about a deal.

And when it comes down to it, both companies have the same end goal: to keep growing.

Although Microsoft has a bad history with acquisitions — ahem, Nokia and aQuantive — these deals were all under the former CEO Steve Ballmer. With Nadella in charge, the new CEO has a goal to sell its services and make partnerships along the way to do that.

Even still, the deal is one of the biggest acquisitions in the tech space, meaning it could be the riskiest. But since the companies are uniquely different and will remain separate, employees don't have to start panicking that their jobs are at risk of being cut.

It also doesn't mean that the two companies won't help each other out. Just think about it: LinkedIn is a space for professionals where hiring managers look to recruit, users look for jobs and co-workers connect and boost each other's profiles via endorsements, and Microsoft has the software and services like Office 365, Word, Office and Skype — which help make professionals more productive. Now imagine what these companies could do by merging their graphs.

In the future, these two could blend together to help users connect to be able to do things like Office suggesting a LinkedIn professional who can help on a specific task, Nadella said in an internal memo.

Microsoft also has tools like machine learning and a digital voice assistant in its arsenal, which could be integrated with LinkedIn to make the platform more attractive to new and current users. By acquiring LinkedIn, Microsoft can add more data to its machine learning, including a record of jobs that are available and skills needed for particular jobs. Cortana could also be used to provide users with info on their business client or employees, help easily share important documents with Office integration, pencil in a meeting and more.

The Cons

With many reasons why the acquisition makes sense and has the possibility of being beneficial for both companies, there's always the chance that it will be nothing more than a gigantic failure.

As mentioned above, LinkedIn hasn't been growing much over the last year. And with the price of its stock plummeting per share, many might argue that Microsoft overpaid for the company. There is always the chance that the company writes this acquisition down and then suddenly dismisses it, just like it did when it acquired Nokia for $7.2 billion three years ago and then wrote it off last summer.

While combining LinkedIn with Office 365, Dynamics and OneDrive may sound good in theory, Microsoft already has collaboration services at its fingertips. It acquired Skype for $8.5 billion in 2011 and the enterprise social network Yammer in 2012. So the deal may end up being one-sided, with Microsoft focused on selling its services and gaining info from LinkedIn's data while continuing to let the company do its own thing. After all, the company did say independence.

And if there is major integration, will LinkedIn users get annoyed that they keep seeing ads to join Microsoft services? Will this cause them to stop using the platform as much? Do LinkedIn users really want Cortana to be able to access all their information? There's always a chance they don't and they won't.

Even though LinkedIn is the social network for business professionals, that doesn't mean there isn't still a dark cloud hovering over the platform as of late. After a 2012 data breach has finally seen light on the internet after a hacker put 117 million accounts up for sale, many users may not feel safe signing up or sharing too much on the network.

It remains unseen whether or not this acquisition is a disaster in the making or one of the best things to happen to Microsoft. In the meantime, the technology company will have its hands full with its new company.

Source: LinkedIn

ⓒ 2021 TECHTIMES.com All rights reserved. Do not reproduce without permission.