Microsoft has an entrenched, enduring monopoly in both personal computer operating systems and office software. LinkedIn is the largest business-oriented social network. Are there antitrust issues with the combination? Likely not.
Microsoft is not strong in social media, and LinkedIn doesn’t make operating systems or business software. So there does not seem to be many horizontal issues. There similarly does not seem to be many vertical issues. LinkedIn’s social network is not a key input for any entity that makes software that competes with Microsoft. And Microsoft’s software is not a critical input for any competitor of LinkedIn. You don’t need to be using Windows to create a social network on the Internet.
So why do the deal? My guess is that Microsoft is concerned that cloud-based programs (like Google Sheets and Google Docs) are going to start cutting into sales of their machine-based products. Part of the desirability of the cloud-based products is the ease with which parties can collaborate. For you lawyers, think iManage or PCDOCS. Those programs allow multiple users to edit and share documents without users tripping over each other, losing track of versions and edits, and the like, but in a private, closed-network. Google’s products do the same thing but in the cloud. Because Google’s products are free, and many people have access to Google’s free email, Google’s cloud already has an expansive network of users and can add new users very easily. What buying LinkedIn does is give Microsoft a ready-made network of users for Microsoft’s cloud-based (or at least cloud-interoperable) products. Their products are suddenly more useful because you can readily share your work product with the people you actually work with. And now that Microsoft owns LinkedIn, it knows who you work with. This isn’t an antitrust violation. In fact, they are making Microsoft’s products more useful and desirable.
Notwithstanding the foregoing, I do think the deal will be investigated by at least the Europeans and probably the Americans as well. For the Europeans, it would be an excellent opportunity to put some meat behind their musings on big data and competition law. The Americans are “behind” the Europeans on big data, and could use the investigation of Microsoft’s acquisition of LinkedIn to educate themselves. I say “behind” because I don’t think knowing things about people, who voluntarily share that information, can give rise to competition issues. The economic value of big data is in its ability to anticipate future demand and put suppliers together with consumers. The more data these companies have, the better they will be at anticipating that demand, indeed perhaps to the point where they will know what you want before you do, and can have a vendor there ready to go when that demand germinates. LinkedIn’s data set is much more complex and thus harder to mine than either Google or Facebook, so the value of their “data” isn’t going to be nearly as great at least with regard to selling members things. We see that David Evans wrote a scathing piece on the inutility of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, two months ago. I bet he’d like to buy a pizza.
I think this deal is about competing with the 800 pound gorilla in cloud-collaboration. And instead of leveraging a market they dominate to crush the competition, Microsoft has bought a genuinely complementary product.