Microsoft appears to be hell bent on acquiring another social media company to go alongside LinkedIn in its portfolio. Starting last year, its pursuit of the US operation of TikTok failed after cloud computing rival Oracle gate-crashed talks after the Trump administration raised national security concerns.
Despite being rebuffed in their attempts to acquire TikTok it appears that Microsoft is still heavily considering more acquisitions. A potential $51bn purchase of Pinterest has been mooted in recent months.
Microsoft has been pursuing an acquisition strategy aimed at amassing a portfolio of active online communities that could run on its cloud computing platform. And despite a number of hurdles it appears that Pinterest has been strongly considered as a potential target.
These hurdles include Pinterest’s market value and the platform having previously stated that it desires to remain an independent company.
While Pinterest’s market value is about 3 per cent of Microsoft’s $1.83tn, this represents the largest deal in Microsoft history.
Microsoft, which mainly sells to businesses and governments rather than consumers, has avoided most of the political backlash that has made it more difficult for Facebook and Google to make big acquisitions.
Why does Microsoft want Pinterest?
In recent years, Microsoft has moved to expand its portfolio to limit its reliance on selling to other businesses. Besides buying professional networking site LinkedIn for $26bn in 2016, it has acquired GitHub, a code repository that doubles as a network for software developers, and Minecraft, an online game that last year passed 131m users. Last year, it acquired private gaming company ZeniMax for $7.5bn.
Acquiring Pinterest would give Microsoft a huge jewel for its crown whilst also stealing customer away from Amazon Web Services. Which would also help to cement Azure as a big player in the Cloud Computing space.
There is also the benefit of the data that Pinterest would provide Microsoft. Similarly Pinterest like LinkedIn is a site with large numbers of active users, many of them posting frequently which could be used to inform other Microsoft apps and services. Crucially a social media site where millions of users post images of things they are interested in could turn into an important source of data for customers of Microsoft’s marketing services. While also acting as raw material for training the company’s AI systems.
Pinterest made its stock market debut in April 2019 and has benefited from a pandemic-related surge in usage as people have stayed at home during lockdowns and business has shifted to selling online.
It has been broadening its advertiser base, introducing ad formats and ecommerce opportunities that bring it in line with similar developments at rivals Facebook and TikTok.
Because of the nature of its content, Pinterest has largely avoided the scrutiny faced by other platforms over moderation failures.
What this could mean for marketers and businesses
With Pinterest placing more interest in advertising and e-commerce opportunities, there is a huge scope for data that marketers then begin to make use of. When this is combined with the potential of LinkedIn, marketers and businesses will begin to see huge opportunities to advertise to both the personal and professional interests of their audiences. This is obviously dependant on whether they manage to persuade Pinterest to give up on their pledge of independence.