Microsoft, LinkedIn should heed Vestager’s warning about ‘unique’ data

9th September 2016. By Dafydd Nelson

Microsoft’s $26.2 billion bet on LinkedIn may be about to collide with European antitrust jitters about Big Data.

Margrethe Vestager, the EU competition chief who will review the US software maker’s takeover plan, dispatched a warning today about companies whose vast sets of personal data can’t be replicated.

“Having the right set of data could make it almost impossible for anyone else to keep up,” the Danish commissioner said during a speech in Copenhagen.

Vestager didn’t talk about Microsoft and LinkedIn, though she did explain how the issue played out in an EU review of Google’s purchase of DoubleClick and its river of advertising data. The key question, she said, was whether a dataset was “unique” enough to drive rivals out of the market.

That issue is sure to come under the microscope when EU case handlers in Brussels investigate Microsoft’s $26.2 billion takeover of the professional social network. Is LinkedIn’s vast collection of data about the careers, connections, e-mail addresses and educations of its 450 million members unique — or can it be replicated?

Narrower market?

Microsoft is likely to argue that the acquisition won’t give it an unwarranted edge over rivals. The software giant can point to Facebook and other social-network rivals, which also hold vast amounts of data about individuals.

But the European Commission’s analysis of the LinkedIn takeover could focus on a potentially narrower market for “professional” social networks. That could spell trouble for Microsoft, because competition in this niche is less fearsome.

Companies including Hamburg-based Xing and Plaxo, which is now owned by Comcast, could be viewed as professional networking rivals. But they are dwarfed by LinkedIn when it comes to user numbers.

Xing says it has more than 15 million users worldwide, while Plaxo stores more than 50 million address books — nowhere near LinkedIn’s 450 million.

Rivals may well worry that Microsoft’s linkup with LinkedIn will elbow them out of the market. Connecting LinkedIn’s vast network of business professionals with Microsoft’s suite of software products makes for a compelling combination that could see users shun social-networking rivals, stunting their growth.

Recruitment concern

The transaction — the biggest in Microsoft’s 41-year history — could also stoke concern among companies that help identify candidates for job vacancies.

Software including Microsoft’s Dynamics Applicant Tracking System can be used by recruitment consultancies in conjunction with LinkedIn products that help identify candidates for job openings. The merger could make life harder for rivals seeking to sell competing products, which could end up being seen as inferior.

Microsoft and LinkedIn would probably argue that there are plenty of alternative software packages on the market for managing and storing data related to human resources.

They might also point out that recruitment businesses such as Monster allow job seekers to upload their resumes directly onto their websites, bypassing social networks.

Watching closely

In her comments today, Vestager cautioned that it would be wrong to be “suspicious of every company which holds a valuable set of data”.

But she also said that her department at the commission would be keeping “a close eye on whether companies control unique data . . . and can use it to shut their rivals out of the market.”

In the case of Google and DoubleClick, the commission concluded that DoubleClick’s advertising data, however valuable, wasn’t unique. “Other companies had similar data, or they could buy it in. So combining Google’s data with DoubleClick’s didn’t actually stop anyone else from competing.”

But Vestager also cited a French antitrust decision ordering GDF Suez to provide rivals with customer data on regulated natural-gas tariffs — amid concerns that the utility might have used the list to keep competitors off the market.

Microsoft hasn’t yet filed its acquisition of LinkedIn to the commission in Brussels. But when it does, listen closely for one word: unique.

The deal also needs competition clearances in the US, Canada and Brazil.