With the $26.2 billion acquisition complete, an older and wiser Microsoft under CEO Satya Nadella is taking a different approach to integration this time around.
Microsoft’s history with acquisitions has not been stellar, and as this is the biggest yet, the stakes have never been higher. The tech giant’s last big acquisition, the mobile business of Nokia, was the last big act of outgoing CEO Steve Ballmer. By the time the deal closed in 2014, Satya Nadella had taken over. He dismantled the deal, which ultimately cost the company $7.6 billion. A previous acquisition, of digital advertising firm aQuantive in 2007, was also ill-fated.
However, the Microsoft of today is in many ways a different company, having been set on a different course by Nadella. For one, it is more focused. The new CEO has made a series of smaller, more strategic deals, which have yielded positive results.
In a joint interview, Nadella and LinkedIn’s CEO, Jeff Weiner, laid out their vision for making the acquisition a success. Their approach could be described as “middle of the road”. Microsoft intends to give its new social network a high degree of autonomy, rather than trying to weaving it into an existing product line. Weiner will remain CEO. Nadella has even asked him to lead the integration team.
At the same time, LinkedIn will not be treated as a separate business. Weiner and Nadella have both said their top priority is to expand LinkedIn, which currently has more 470 million members. Microsoft has the sales and distribution might to make this happen.
This approach is similar to how Microsoft has handled Mojang, the developer behind Minecraft. Microsoft acquired Mojang for $2.5 billion in 2014. With the right degree of autonomy under Microsoft’s ownership, the company has continued to grow. Importantly, it has succeeded in retaining key talent.
David B. Yoffie, Professor of International Business Administration at Harvard Business School, said that retaining talent will be a key challenge in making the Microsoft-LinkedIn deal work. This is especially crucial with regard to executive talent. As the New York Times reports, Weiner has emphasised his commitment to LinkedIn: “I’m in my dream job, and the combination with Microsoft provides that much more opportunity to realize what it is we set out to do here”, he said. “So I’m not going anywhere.”