We all took a collective gasp when we saw the price tag of Microsoft’s acquisition of LinkedIn. Now that the dust has settled a bit, we can pause and reflect on what this means from a data, privacy and email perspective — given that all three are potential strengths, weaknesses and concerns arising from the merger of two giants.
While at a conference recently, I sat down with my colleague and friend, Dennis Dayman, chief privacy officer at Return Path, and discussed how this deal could change the B2B data landscape. Here’s what he had to say.
Len Shneyder: What did you make of this deal when you saw the announcement?
Dennis Dayman: At first I wasn’t sure what their plans were outside of an existing partnership. The more I thought about it, the more I began to realize Microsoft, like Google and other enterprises, really lacks a real social media presence or product. On the other hand, LinkedIn is a company that doesn’t make operating systems or business software, yet they’re at the forefront of enabling the people who do. So then what are the competitive advantages for these two behemoths joining forces? Why would Microsoft want LinkedIn, and how would they use it as a competitive advantage against Apple?
LS: Is that a rhetorical question? At $26 billion, the acquisition is much more than a checkbox. Apple doesn’t have a social platform per se, but some may perceive them as a social enabler: The App marketplace is a kind of social landscape, music is a socially engaging medium, as are movies — these are culturally significant and drive social engagements. But I think I see what you’re saying.
DD: Right now, Google has lots of data on users of their Google Apps product line for B2B clients and Google doesn’t sell or share that out to anyone; on the flip side, we know that Microsoft has lots of data on users in their Office 365 product line… it’s an interesting parallel when you think about it.
LS: Very true, I hadn’t thought of it that way. So what’s in it for Microsoft? Does this help them go toe-to-toe with the social giants or the operating system platforms?
DD: I think it’s more about Microsoft wanting to know you, the B2B user, and how you engage with business productivity tools. Additionally, the connections you make and maintain in the world serve as a kind of social launching pad for the products and platforms you use on a daily basis. From the content side, who you are talking to, and what you are talking about are equally important. Having all that information positions Microsoft better in today’s competitive B2B computer market, B2B collaboration, B2B operating systems market and the hottest market of them all: cloud computing.
LS: So at the end of the day, data is king, it’s always what’s most important and LinkedIn represents a kind of B2B social intelligence that Microsoft only had in the form of usage data through Outlook 365. They knew how people worked with their products, but they didn’t know what they were saying about their products and what those conversations meant in light of their products.
DD: Absolutely! This brings them up to par with Google. Google’s products are free, their email service is free and free is always awesome in my book. Google’s cloud already has an expansive network of users.
LS: How does Google’s cloud stack up against Azure? Or does this even matter?
DD: I’m less interested and concerned about the direct cloud-to-cloud comparison of Azure versus Google. What we have to realize is that the merger gives Microsoft access to a plethora of already involved users with lots of “cloud” data and the ability for those B2B users to easily share their Office 365 work product with many others outside of their company’s user base. It gives Microsoft the ability to know who you might be working with, partnering with or just plain sharing data with.
If you look at what the popular email client CloudMagic has done with their “Sender Profile” feature that provides users a button labelled “Know More” after receiving or sending an email, you can see the sender’s organization, location, LinkedIn, Facebook and Twitter profiles of that based purely on their email address. Can you imagine the power and ability within any Microsoft controlled email product like computer-based Outlook or the cloud-based Office 365 knowing more about the sender of the message? Taking it up a notch, what could Microsoft do or build if they knew more about what sorts of B2B emails you get daily? What your company needs based on received content? This puts Microsoft RIGHT into the B2B data analytics game that many of their competitors are already in.
LS: I think you’re onto something. Google released Inbox by Google, which was an algorithm designed to organize the clutter of your inbox. Email is so terribly personal that I don’t think it ever really took off; we’ve all been using email for a long time and have our own human-driven algorithms. And IBM announced Verse, which was a kind of inbox manager, as well, but it seems to have morphed into a quasi-business/social collaboration tool. Isn’t there a cautionary tale in these two product lines that have seen very little pickup?
DD: Absolutely, but I think IBM had no real foundation in the email space to launch Verse. Inbox management apps are really a B2B tool and probably won’t see too much traction among B2C, so I’m not surprised that Inbox by Google is in a kind of limbo between the two.
The Microsoft deal is much more pointed and focused; it adds a new interesting spin to LinkedIn’s features and would start allowing the app to report your location similar to how the Google Maps app regularly reports and stores location history for the day. Geo-location would add a unique dimension to Microsoft’s data in addition to the social chatter of LinkedIn. Microsoft could ask and answer questions like which corporate titles are traveling more than others? What might be interesting markets that certain people are traveling to? What is being said in that marketplace and what tools if any are being used? What happens if Microsoft’s CEO all of a sudden starts showing up at 37.4233111, -122.0706458 (LinkedIn HQ GPS coordinates). Could it be about a partnership, merger or just plain lunchtime golf?
All this location information makes Microsoft better positioned to sell their products to companies AND opens a secondary data market to sell access to research and analytics firms hungry for this kind of focused B2B data. Airlines and hotels have to be excited at the prospect of learning more about their business travelers. Insights like where to build the next hotel and more information about business routes to add or hubs to build out could be mined and explored through this kind of data. Past travel history, conference attendance, etc. could all be gauged long in advance because people discuss it on social platforms like LinkedIn; smart vendors just need access to a rich source of data.
LS: Not to rain on your parade, but the scenario you described above has all kinds of crazy data and privacy implications. I don’t think half of the rosy future you described above would pass muster in the EU. Privacy hawks are, as we speak, sharpening their talons to sink them into the flesh of any future intel products, don’t you think?
DD: As awesome as it is for B2B marketing and marketers, you’re right, there are some needed product enhancements and permissioning that has to occur before any of the ideas I’ve mentioned can be brought to market. Many security and privacy people will want to review the app as it does change and, as they probably do, all new vendors or applications that are installed on their computers and mobile phones. That’s the easy part. Sort of like how users of Google Apps Collaboration cloud gives users full control of who can view, edit and own documents and more importantly be able to primary share first with their organization and co-workers before outsiders. My company ran through this exact assessment to ensure we weren’t leaking data once we made the jump to the cloud.
I also think that this won’t be an issue for the merger to continue here in the United States when it comes to antitrust issues or more importantly privacy issues. I think the European regulators will want to look at any changes or use of data by Microsoft with a magnifying glass (and maybe even an electron microscope) ensuring that the proper data transfer and use mechanisms are in place and that end users have been given the consent, notice, choice and control over their information that is expected and required. I’m sure Microsoft, being a leader in the privacy space, won’t have many problems ensuring they’ve given the end user the protection they deserve and are entitled to by law. Microsoft declared its support for the EU-U.S. Privacy Shield and has been a huge leader and supporter of privacy through the International Association of Privacy Professionals (IAPP).
LS: So taking privacy off the table, and the business strategy, what do you think Microsoft is trying to do from an end-user perspective? How are they trying to make our lives better?
DD: Microsoft says they are simply trying to alleviate business people from having to go back and forth between productivity tools and social networks; I believe that to some degree. This may have been where they started, but it’s not a guarantee that this is where they’ll wind up once they all dive into the technology and ferret out the true value of what they have.
LS: Will this merger make LinkedIn more secure? Or let me rephrase it; LinkedIn has lots and lots of data, and now that this data will be exposed and used by Microsoft, does this automatically paint a giant target on both companies?
DD: I’ve said it many times, the increase in security breaches is not about just having the data, but in how hackers will want to use that data to continue sending out nefarious things like spam, phishing and ransomware. The first step in doing bad things with email is compromising users, but if you can compromise a company, then you have more than just an address, you have the means by which to steal an identity.
The huge acquisition uptick in the marketing vertical over the past five years is intentional. Data, no matter how it’s obtained or used, is the new gold standard. As the world becomes ever more data-driven, smart businesses look to fully realize the benefits of the data revolution, from streamlining internal processes and communicating more ably with current and potential customers, to lowering costs and creating jobs. However, all of these potential future scenarios have to be tempered with a strict application of best practices security and data privacy.
As far as what you and I do, Microsoft is getting instant access to a mountain of user data, including contact and device preferences, demographics, brand and organizational affiliations and even company-level marketing spend metrics. We know how powerful detailed data can be as market research firms, hedge funds and retailers have all shown great interest in our item-level consumer receipt data. What LinkedIn delivers is data with proven practical applications (sell more LinkedIn ads or messages or whatever). One challenge will be convincing advertisers Microsoft will remain a neutral party (i.e. not muck with competitor ads and recruiting efforts).
Satya Nadella has already said they will not make sweeping changes to the platform and Weiner will retain great autonomy. That’s probably a smart move, and actually would be helpful to the users of it. However, what I’ve said throughout this Q&A is that they will change the underlying data-sharing technologies like GPS tracking or data reporting that the average user doesn’t see or really “care” about. That may be one of the biggest game changers to come out of this acquisition.
@LenShneyder and @ddayman