In one of the greatest tech deals in history, Microsoft has offered $26.2 billion dollars to buy the up and coming professional social media platform LinkedIn. This is the most recent acquisition in a long line of Microsoft corporate purchases that include messaging and VOIP pioneer, and the iconic communication equipment maker, Nokia. With this purchase, Microsoft is consolidating its position in the tech industry, as well as serving its goal of growing revenue as fast as it can.
Although it was one of the most expensive tech deals in history, with LinkedIn, Microsoft will be able to enter the social media sector. LinkedIn also offers many competitive advantages for Microsoft, based on the growing amounts of data that it produces. This deal will also allow Microsoft to enhance its marketing strategies for its core products, and will give it access to a great pool of talent that will be able to add value to Microsoft’s core business.
This acquisition fits a pattern of business deals struck by the tech giants, which allows them to compete with each other in different sectors, while improving their core businesses. Google, Amazon, Facebook and Apple, have all made the acquisitions necessary to compete with each other on each other’s core business activity. This latest acquisition falls into the category of competing with Facebook on the social media realm, just as Google tried a similar move by launching Google plus.
Microsoft however has largely pursued a different strategy in competing with the other tech giants. It has resorted more to acquisitions and less to in house developing. The great exception is Bing, which is meant to compete with Google as an alternative search engine. That exception is probably due to the fact that no major search engines were up for sale, and that could be one of the most difficult sectors to compete in.
Otherwise the purchase of Skype and Nokia along with LinkedIn, signal Microsoft’s interest in inserting itself back into the race with the other big four. Judging by the deals it has struck, it might well be the best suited to compete with all the other four tech giants on their own turf. Nevertheless, this has come at a great cost, so hopefully the plan will bear fruit quickly, or Microsoft’s stock will start to falter.