An American duel in Brussels: Salesforce against Microsoft over Linkedin deal

visit-by-margrethe-vestager-member-of-the-ec-to-paris

Visit by Margrethe Vestager, Member of the EC in charge of Competition, traveled to Paris where she gave a press conference at the EC representation about how competition serves citizens. © European Union , 2016 / Source: EC – Audiovisual Service / Photo: Silvère Gérard

When earlier this year Microsoft snapped up the world’s headlines by announcing it would have acquired LinkedIn with a colossal $26.2 billion deal, everyone was already preparing for the shockwaves this move would have generated. Last week, US cloud computing company Salesforce.com  openly urged European Union regulators to block the acquisition over unfair competition concerns. The breaking news made clear that antitrust will be once more a huge weapon for competition, and that the match will be once again played on the EU field.

Microsoft’s biggest move

US giant Microsoft Corp. announced three months ago a deal to buy the world’s largest professional networking platform LinkedIn, with an all-cash deal worth a total of $26.2 billion, $196 a share. The deal represents the company’s largest purchase and one of the biggest technology acquisitions ever in history. Microsoft indeed has been chasing the acquisition desperately, in a strong attempt to revitalize its activity after some tough years behind competitors. Chief Executive Satya Nadella openly declared he was hoping the deal will open new horizons for Microsoft’s Office suite to escape a saturated market.

Thorny issues

The entire Redmond, Washington-based company had hoped indeed to get EU approval quickly and to be able to close the deal in the next few weeks, however the situation looks now a bit more complex. Last Thursday, the Californian Salesforce.com openly said the deal threatens innovation and competition, and formally urged the European Union, regular punisher of Microsoft, to take a close look at Microsoft’s takeover of LinkedIn through an official statement.

“By gaining ownership of LinkedIn’s unique dataset of over 450 million professionals in more than 200 countries, Microsoft will be able to deny competitors access to that data, and in doing so obtain an unfair competitive advantage”, stressed Burke Norton, Salesforce’s Chief Legal Officer. Mr. Norton said the deal also raises “significant antitrust and data privacy issues” that Salesforce thinks US and European Union authorities should “fully scrutinize”. “Microsoft’s proposed acquisition of LinkedIn threatens the future of innovation and competition”, he continued.

Microsoft’s reply

Microsoft reportedly responded by pointing out that the deal had already passed regulatory muster in some countries, as published last week by the Wall Street Journal, and that it is Salesforce, not Microsoft, that dominates the market for software that handles customer relationship management. “Salesforce may not be aware, but the deal has already been cleared to close in the United States, Canada, and Brazil,” said Brad Smith, Microsoft’s president and chief legal officer. “We’re committed to continuing to work to bring price competition to a CRM (customer relationship management) market in which Salesforce is the dominant participant charging customers higher prices today”, he added.

A longstanding story

The clash is part of a longstanding argument between Microsoft and Salesforce. Both companies indeed put a bid for LinkedIn earlier this year, but Microsoft won out. The rumours around an attempt by Salesforce to purchase the social network Twitter Inc. would show a plan B was already in place anyway. Putting this very least aspect to one side, it is still plain to see why Salesforce is worried about this move by Microsoft: LinkedIn will give Microsoft access to a potentially unlimited amount of clients’  data, and so potentially enhance its CRM very quickly.

CRM income

The entire Saleforce’s turnover basically comes from a CRM product, being the top provider of software for customer-relationship management, according to Gartner Inc. In 2015, it had 20 percent of the global market by revenue, while Microsoft was No. 4 with 4.3 percent, as reported by Bloomberg. Now Salesforce’s biggest concern is that Microsoft will shut down access to LinkedIn data, cutting down its growth potential.
Just yesterday, Microsoft’s President Brad Smith, while speaking to the press in Dublin, denied Salesforce accusation that they will cut off LinkedIn data for Microsoft’s competitors. “It is not something that we have any intention of doing”, he said according to the Irish Independent. “The LinkedIn data is public today and we want to make that data useful in lots of new ways”. Despite Mr. Smith’s words, Saleforce’s concerns naturally still remain.

The EU data knot

Simple as it sounds though this is a case of pure competition; all about the most powerful currency of the future: data. Hence, Salesforce could not have chosen a better moment to let its complaint out. Only last Thursday, the European Commissioner for Competition Margrethe Vestager delivered a speech on competition and data handling. “Companies need to make sure they don’t use data in a way that stops others competing”, she said at the beginning of her speech. “Data could be an important factor in how a merger affects competition. A company might even buy up a rival just to get hold of its data, even though it hasn’t yet managed to turn that data into money”, she underscored.

Despite never mentioning Microsoft, Salesforce.com and LinkedIn, she used very clear-cut words that sound indeed like a premonition. “We are therefore exploring whether we need to start looking at mergers with valuable data involved”, she said. “We can show people that companies that use big data have to follow the rules. So I will keep a close eye on how companies use data,” she continued. “I’m sure that the European Data Protection Supervisor and BEUC will do the same. And between us, I’m convinced that we can make big data not a threat, but the key to a better future”.

A deeper look

Salesforce’s request for an EU investigation does not necessarily mean that  the Commissioner Margrethe Vestager will open an antitrust file against Microsoft. However, all the noise that Salesforce’s statement has raised around the gigantic acquisition will possibly not help Microsoft in its attempt to conclude the merger by the end of the year. Normally even if the EU will not formally block Microsoft’s move toward the acquisition of LinkedIn, it could decide to take a deeper look at the deal, dragging the whole question into a scrutiny process that would last several months.

In principle the Commission’s preliminary review of merger and acquisition deals lasts 25 working days, which can be extended by about four months “if it has serious concerns”. But surely this is something that Microsoft, a regular recipient of gigantic EU fines, has almost surely considered when the first bid to acquire LinkedIn was presented.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

TTIP wins Merkel’s endorsement ahead of 2016 tough deadline

The Commission sees ‘moderate recovery’ but prospects deteriorate

Why the ECB had to clarify it caters for the entire Eurozone not just Germany?

EU accused of being too nice with Gazprom in the infamous antitrust case

EU-US to miss 2015 deadline and even lose Germany’s support in TTIP’s darkest week yet

Is a full course lunch, a new Commissioner and 2 million anti-TTIP citizens what you would call a “Fresh Start”?

ECB readies itself for extraordinary monetary measures defying Germany

Austerity lovers to put a break on Renzi’s growth vision for Europe? the Sting reports live from World Economic Forum 2015 in Davos

More billions needed to help Eurozone recover; ECB sidesteps German objections about QE

One Day in Beijing

EU signs with Canada historic trade agreement, others to follow

GREXIT final wrap-up: nobody believed Aesop’s boy who cried wolf so many times

COP21 Breaking News: “There is an ecological debt that the world needs to pay back to Africa”, French President Francois Hollande promises 2 Billion euros by 2020 from Paris

Europe united in not supporting a US attack on Syria

Migration crisis: how big a security threat it is?

Does the world have strong enough institutions to handle risks like Trump and Brexit?

Commission’s feeble response to financial benchmarks fraud

Obama turns the G20 summit into warmongering platform

The Chinese spirit

Refugee crisis: Commission proposes a new plan urging EU countries to help Italy

Entrepreneurship’s key to success showcased by a serial young entrepreneur

On European immigration: Europe’s Missing Citizens

Does the Commission subsidise a forced labour scheme in Britain?

Doctors vs. Industry 4.0: who will win?

Is Data Privacy really safe seen through Commissioner’s PRISM?

European Business Summit 2014 : The Sting Report, Day II – Business, Politics and EBS 2015

ECB to support only banks not Peoples

Half of Eurozone in deflation expecting salvation from monetary measures

Quantitative easing: how Mario can tackle low inflation in Eurozone

France fails again the exams. Kindly requested to sit in on Commission’s class

Syria: Why did the US now take the Russian offer for a truce? What next?

Will Turkey abandon the refugee deal and risk losing a bonanza of money?

YO!FEST ENGAGES 8,000 YOUNG EUROPEANS IN FUTURE OF EU

Global Citizen-Volunteer Internships

Why the 33,000 staff European Commission did not have a real contingency plan for the refugee crisis?

Microsoft’s YouthSpark: a kiss of Life to European Youth from the European Parliament

The ASEAN Community sees the light: the genesis of a new powerful economic and political bloc and EU’s big opportunity

Is a deal over EU budget possible today?

EU: Turkey to shelter Syrian refugees and turn other immigrants back in return of €3 billion

The increasing drug prices in Europe

EU Commission: Once in every 20 beef meals you eat…horse probably with drugs in it

France and Poland to block David Cameron’s plans on immigration

The world is a book and those who do not travel read only one page

WEF Davos 2016 LIVE: “Chinese economy has great potential, resilience and ample space for policy adjustment”, China’s Vice President Li Yuanchao reassures from Davos

Intel @ European Business Summit 2014: Better decisions now, the new business dashboard 

Me and China

GSMA Mobile 360: Connecting Cities, Connecting Lives, Connecting Europe

Banking Union: ECOFIN and Parliament ready to compromise

A very good morning in European markets

EU Commission challenges Berlin by proposing breakthrough legislation on banks

Advocate General ‘outlaws’ Data Retention Directive

Gloomy new statistics signify no end to Eurozone’s economic misery

Will Brexit shatter the EU or is it still too early to predict?

Why banks escape from competition rules but not pharmaceutical firms

Human rights in Brussels and in Beijing: a more balanced approach needed

The Americans are preparing for the next financial crisis

While EU Open Days 2013 discuss the 2020 strategy, Microsoft shares a glimpse of EU 2060

Paris agreed with Berlin over a loose and ineffective banking union

IMF’s Lagarde to Peoples of the world: You have to work more for the banks!

A few, or rather two, trade and economic alliances may rule our brave new world

More Stings?

Comments

  1. Microsoft + LinkedIn is the short-term issue for Salesforce. The bigger issue is Facebook + WhatsApp. WhatsApp sharing phone numbers with Facebook creates the de-facto largest user directory on planet Earth. Admitedly it is a “consumer” and not a “business” directory yet. This is about to become one though with yesterday’s launch of Facebook Workplace. We then look at a converged persona directory (Workplace), versus a business persona directory (LinkedIn). Workplace (formerly Facebook at Work) is 20 months in the making, it is – in our point of view – no coincidence Microsoft bought LinkedIn before that beta was completed. Unlike Salesforce, Microsoft has to be concerned with Workplace becoming a de-facto collaboration platform. Unknowingly, Salesforce and Microsoft have many reasons to talk to each other and join forces.

Trackbacks

  1. […] SOCIAL SELLING THAT SCALESJune 20, 2017relevante.me No Comment An American duel in Brussels: Salesforce against Microsoft over Linkedin deal […]

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s