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.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Spread Her Wings: Let Her Fly

German stock market is not affected by the Greek debt revolution while Athens is running out of time

Protecting workers from biological agents: how to classify SARS-CoV-2

Portuguese Presidency outlines priorities to EP committees

World’s human rights watchdog spotlights Afghanistan, Yemen and 12 others: Here’s the scoop

State aid: Commission approves German aid scheme to support airports affected by the coronavirus outbreak

Is your smart home as safe as you think?

COVID-19 vaccines: Parliament supports speedy authorisation of safe vaccines

Shipping industry must contribute to climate neutrality, say MEPs

Security Council welcomes Yemen breakthrough, but lasting peace remains a ‘daunting task’

Project Manager – 2024

In China things are moving in the right direction

Why we need a ‘great new contract in health and healthcare’

Erasmus+: an expected budget of €3 billion to be invested in young Europeans and to help create European Universities in 2019

Taxation: Commission refers Hungary to the Court for failing to apply the minimum EU excise duty on cigarettes

America writes-off Iran, blocks Europe’s Tehran talks

5 facts you should know about the world’s refugees

These countries are making ‘travel bubbles’ for post-lockdown tourism

Don’t take African generosity towards refugees for granted, says UN refugee chief

Normal reactions to the abnormality of the pandemic

Oxford Dictionaries’ word of the year for 2019 is ‘climate emergency’

State aid: Commission approves over €1 billion support for high-efficient cogeneration of electricity and heat in Slovakia

Bureaucracy in the member states again the obstacle for long due strong European Hedge Funds

Long-term EU budget: The Union’s ambitions must be matched with sufficient reliable funding

Monday’s Daily Brief: human rights in the Near East and a Forum for Refugees

Plastic is a global problem. It’s also a global opportunity

Commission welcomes agreement on the Connecting Europe Facility to fund greener, more sustainable transport and energy networks, and digitalisation

More capital and liquidity for the banks

OK computer: why the machine age still needs humans

Tuesday’s Daily Brief: violence surges in Nigeria, anti-Semitism on the march, taxing pollution to tackle climate crisis, and more

These 5 charts reveal the gender and diversity gaps start-ups must bridge

Humanitarian action: New outlook for EU’s global aid delivery challenged by COVID-19

Here are three ways organizations can prepare for tomorrow’s world

This is how countries compare on gun deaths

Globalization 4.0 must build a better world for working people

UN nuclear watchdog will help verify DPRK nuclear programme, if agreement forthcoming

Lagarde discusses the European Central Bank’s policy revamp with MEPs

Greece and Ukraine main items on EU28 menu; the course is set

Google and Apple suddenly realise that doing business in EU is tough?

Are we letting politicians play with migrants’ health?

‘Critical moment’ for sustainable development, UN chief tells major financing forum

MEPs and EU ministers agree on closing information gaps to enhance security

UN chief condemns student abductions in north-west Cameroon

‘Deteriorating’ human rights in Belarus amounts to ‘wholescale oppression’: UN expert

World Pride underscores that all people are born ‘free and equal’ in dignity and human rights

Germany is the world’s most innovative economy

Viet Nam shows how you can contain COVID-19 with limited resources

This interactive map could help you discover a new species

To build the workforce of the future, we need to revolutionize how we learn

Sri Lankan authorities must work ‘vigorously’ to ease simmering ethno-religious tensions, urges UN rights expert

Guarantee of mental health’s stability in times of pandemic

North-east Nigeria displacement crisis continues amid ‘increased sophistication’ of attackers, warns UN

Parliament: Last compromise on bank single resolution mechanism

Team Europe partners with Equity Bank to support Kenyan business and agriculture amid COVID-19

Deal on an enhanced information system for visas in the EU

A Sting Exclusive: “On the road to Japan-EU Economic Partnership Agreement”, by Ambassador Katakami of the Japanese Mission to the European Union

AIDEX 2015: Humanitarian Hero Award Winner Announced

Main results of European Council of 18/10/2018

We have solutions to crime. We just need to scale them

As people return to work, here’s how we can make commuting more inclusive and sustainable

More Stings?

Advertising

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.

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 )

Google photo

You are commenting using your Google 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 )

Connecting to %s