Salesforce has asked EU antitrust authorities to take a hard look at Microsoft's pending $26.2 billion acquisition of LinkedIn, arguing that it intends to shut off access to the highly valuable troves of user data collected by the site. Here's Salesforce's stance from its chief counsel, Blake Norton:
Microsoft's proposed acquisition of LinkedIn threatens the future of innovation and competition. 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. Salesforce believes this raises significant antitrust and data privacy issues that need to be fully scrutinized by competition and data privacy authorities in the United States and in the European Union. We intend to work closely with regulators, lawmakers and other stakeholders to make the case that this merger is anticompetitive.
Salesforce CEO Marc Benioff also fired off a couple of tweets in which he suggested that Microsoft EVP Scott Guthrie had definitively said Microsoft would shut off third-party access to LinkedIn data. Benioff referred to remarks Guthrie made at a financial conference as proof, but what Guthrie actually said falls short of that, according to a transcript:
[F]rom LinkedIn, where you know who knows who, each other, you know the relationships, you know their skill sets, you know who they worked with in the past.
"The insight you get from a sales reps' or customer service reps' inbox with Exchange and what we have in Office 365, the insight you get from someone's calendar, and even with Skype all of their phone and voice communications and IM traffic, you take all that together and have a cloud that can do deep insight and analytics and machine learning and AI on top of that. You create the ultimate selling tool, the ultimate customer support tool in the industry because you have so much insight that can assist a sales rep or assist a customer service rep that no one other vendor can provide.
Analysis: Don't Expect A Dealbreaker
It's easy to dismiss Salesforce's action as sour grapes, since it lost out to Microsoft in the competition to buy LinkedIn. But the situation is nonethless worth examining.
One thing is for sure: You can't rule out that the EU will in fact conduct an investigation. On the same day news emerged of Salesforce's resistance to the deal, EU antitrust chief Margrethe Vestager made some interesting remarks at a big data conference in Brussels:
[C]ompanies need to make sure they don't use data in a way that stops others [from] competing. 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. We are therefore exploring whether we need to start looking at mergers with valuable data involved.
Vestager didn't specifically reference the Microsoft-LinkedIn deal, but her comments certainly suggest the odds are the EU will take a hard look at it.
It seems highly unlikely the EU would attempt to halt the merger altogether. For one thing, Microsoft has practically no HCM (human capital management) position at present, which sets aside the notion that acquiring LinkedIn presents a monopoly threat, says Constellation Research VP and principal analyst Holger Mueller.
Moreover, the same argument holds if you view LinkedIn primarily as a repository for business data, as Microsoft hasn't had that either. Meanwhile, Salesforce has already built out its Data.com B2B contact service, which it clearly wanted to augment dramatically with LinkedIn.
The LinkedIn acquisition has already been approved by the US, Canada and Brazil, Microsoft has said. That momentum aside, the EU could insist Microsoft make some concessions before giving it the OK, such as a pledge to keep data access open to third parties. And that may be all Salesforce really wants.
Still, "I don't get why or how they feel threatened," Mueller says. "They can license the data and there is no reason Microsoft won't keep licensing it." Maybe Microsoft will make access a little more expensive but Salesforce could always pass those costs through, he adds.
"Microsoft would be foolish not to sell the data," Mueller says. "That's they key difference in the 21st century—data becomes like software. Build it once and sell it at zero additional cost. It's the same with data now—have it once and sell it at very, very low additional transactional cost once you have a DaaS platform. And you want to sell and monetize it as much as possible."
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