The European Union’s competition regulator has green-lit Microsoft’s $26 billion acquisition of LinkedIn. The decision is both a rebuff to Salesforce’s Marc Benioff, who pushed for a probe to be opened into the deal, but also a sign that Microsoft’s sales-lead management business is no threat to Benioff’s company—at least for now.
Benioff lost out on buying LinkedIn when he got Salesforce to pursue the social network for workers, once Microsoft stepped in with an offer that Salesforce in no position to match, as Benioff complained to board member Colin Powell.
Benioff then tried to scupper the union by asking regulators in the US and Europe to probe the deal for competition abuses. Benioff’s theory was that Microsoft would use LinkedIn’s data against competitors, potentially threatening Salesforce’s core business of selling software to manage sales leads, also known as customer-relationship management software or CRM.
The US competition authority declined to take Benioff up on it and quickly cleared the deal, but the European Union’s top anti-trust cop, Margrethe Vestager, opened a probe. Vestager is taking on the world’s biggest tech companies on multiple fronts, ranging from Apple’s opaque tax dealings in Ireland to three anti-trust actions against Google. If anyone was going to scrutinize the Microsoft deal, it would be Vestager.
The commission’s decision analyzed the competition between Salesforce and Microsoft’s Dynamics unit, and it was brutal in its assessment of Microsoft’s weakness. One scenario for competition abuse is for Microsoft to force LinkedIn business customers to also buy Dynamics software. On this count, the EU found that “LinkedIn … does not appear to be a ‘must-have’ solution.”
Another area of possible abuse is for Microsoft to deny competitors access to the all the information in the LinkedIn database, cutting off their ability to develop CRM products based on LinkedIn data. The EU decided that “access to the full LinkedIn database is not essential to compete on the market.”
In sum, the commission said, Microsoft is a “relatively small player” in the CRM market, compared with “clear leader” Salesforce and other players, like Oracle and SAP.
Vestager’s team has ok’d the deal with a few conditions, like making sure Microsoft doesn’t force PC-makers to pre-install LinkedIn. (Indeed, the last time Microsoft bundled software aggressively, it didn’t end well.)