Microsoft Bought LinkedIn to Turn Work Into a Social Network

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Photo: Virendra Singh Gosain/Hindustan Times/Getty Images

In the biggest bit of thunder-stealing since Ross and Rachel kissed on the eve of Chandler and Monica’s engagement, Microsoft announced Monday morning — hours before Apple’s annual WWDC conference — that it would acquire professional social network LinkedIn for $26.2 billion in an all-cash deal.

To state the obvious: That’s a lot of money. It’s the most significant acquisition in tech since Facebook purchased WhatsApp for $16 billion more than two years ago, and if you mostly encounter Microsoft and LinkedIn in the form of Outlook, Word, and irritating, seemingly endless emails about your professional network on LinkedIn, the entire announcement seems a little like the setup for jokes. (And far be it from us to stop you from making those jokes.) But despite Microsoft’s highly public stumbles in the smartphone area (RIP, Windows Phone, Nokia, etc.), it’s still an enterprise-software giant earning tens of billions of dollars in revenue. And LinkedIn — its atrocious design and cloying direct-marketing strategy aside — has north of 433 million members and last year brought in $2.9 billion in revenue, thanks to its “recruitment services” business and premium subscriptions.

So it’s less “joke buys joke” than “successful business-software company buys hotshot new business social-network company.” Microsoft’s plan for LinkedIn remains vague, though its announcement trumpeting the news highlighted LinkedIn’s continually growing user base and revenue, despite the pervasive eye-rolling that surrounds the network. According to Recode, Microsoft CEO Satya Nadella says that Microsoft will manage LinkedIn with a hands-off approach, similar to how the company manages Minecraft (and opposing how the company integrated Skype), but that LinkedIn’s financials will be rolled into its productivity and business units, which means no one will ever know how much money it makes or loses on its own. “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,” Nadella’s press release crows.

What does that mean, though? As the Verge points out, “Microsoft itself has more than 1.2 billion Office users, but it has no social graph and has to rely on Facebook, LinkedIn, and others to provide that key connection.” The social graph is the online networking concept that lays out how users are connected to each other and to their interests and activities — like, say, the software they use and the work they do. At its most basic, it’s just an enormous amount of valuable data about customers, data that Microsoft doesn’t have because its products have no social-networking component, unlike Google and Facebook. (Apple has similarly struggled with this.) Buying LinkedIn buys Microsoft a social graph that it doesn’t have to build.

And once Microsoft has a social graph, it has a treasure trove of information about people, businesses, and activities, which it can put to use in a variety of sectors. Some of the more innocuous (and, frankly, useless) possibilities are suggested in the presentation to investors, which has already been widely circulated, like “LinkedIn Learning,” a sidebar in Microsoft Office that suggests people in your professional network who could help you with your PowerPoint presentation or Word document. Paul Ford lays out a number of more enticing ideas here — some more tongue-in-cheek than others — the shadiest but most ambitious of which would be “mining LinkedIn’s data in order to inform product strategy”:

Microsoft is a software company, sure, but it’s also a bit of a nation-state with an enormously broad mandate. LinkedIn is an unbelievable data-mining platform; it has the ground truth about the global economy, especially around the technology industry, and it has a lock on that data. Microsoft will know what’s going on with Facebook before Zuckerberg does; it’ll know what skills are being added to Googlers’ resumes; it’ll know what kind of searches HR departments are doing across the world, and it can use that information to start marketing its own services to those companies. It can use LinkedIn as a global knowledge base to make more informed, long-term decisions about its own role in the global economy, and it can combine that information with what it learns from other platforms like Windows, Office 365, Bing, XBox, and so forth. It can answer questions like, “are employees of Google playing more XBox or less compared to last year?” It’s…terrifying. And we’ll never really know what’s going on. Which makes it kind of brilliant. But still terrifying.

But the reason for buying LinkedIn is more than just the data it serves up to Microsoft. It’s an admission, from one of the world’s largest enterprise-software companies, that the social network rules the future of work. If the first few generations of enterprise software were designed to replace specific workplace tools, the current generation — and the next several — will be designed to replace the workplace itself. Acquiring LinkedIn has given Microsoft a path to creating a networked identity for each user, allowing the company to compete with workplace-collaboration behemoth Slack, as well as enterprise collaboration solutions being pitched by Dropbox, Google, and Facebook.

How the enterprise social network actually looks or feels when developed is still to be seen, but Microsoft is gunning for the offices that have been slow to adopt newfangled work tools like Google Apps and Slack — many of which are already clients. And unlike Slack, which is mostly one-size-fits-all, Microsoft’s services are more customizable to each client’s needs and configurations (it’s why many prefer the clunky Outlook over the more photogenic enterprise version of Gmail). But whether you want it or not, Microsoft is envisioning a future in which every employee is linked to an online identity, and every project is accomplished through that identity. LinkedIn won’t just be the place you go to look for a new job or network with people in your industry — it could also become the layer through which you interact with your current colleagues.