Microsoft has recently announced the acquisition of LinkedIn for US$26.2 billion.

If confirmed later in the year, the deal will be among the largest technology buys of all time.

Reasons for the deal

The acquisition is the latest effort from Microsoft to revitalise its product offering, as the market shifts towards mobile devices and cloud computing.

The deal is part of Microsoft’s overall plan to strengthen its portfolio of products and services for corporate customers. It will give the company the competitive advantage of direct, unrestricted, and sometimes exclusive access to a leading social media network.

Growing pains

As LinkedIn knows more about its users than any other competitor except for Facebook, its data could prove invaluable to Microsoft when integrated into Customer Relationship Management solutions and other products.

As for LinkedIn, the deal offers hope to renew decelerating growth, and may put an end to questions about its business model. Past attempts to roll out new revenue streams and to improve existing ones have proved expensive.

Is it worth it?

The value of the deal has been the subject of much controversy. Microsoft is buying LinkedIn at a 50% premium on its share price.

After the merge, the plan is for LinkedIn to continue to operate independently, with Jeff Weiner remaining as CEO and reporting directly to Microsoft’s CEO, Satya Nadella.