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Microsoft buys LinkedIn: the value of data

In my latest SXSW talk, I showed a graphic of each of the major technology giants to demonstrate how much of our user data each company owned.

Microsoft linkedin data

I said they won't stop until they know everything about us. Microsoft just bought LinkedIn, so here is what happened:

Data ownership

By acquiring the world's largest professional social network, Microsoft gets immediate access to data from more than 433 million LinkedIn members. Microsoft fills out the "social graph" and "interests" circles. There is speculation over what Microsoft will do with LinkedIn over time, but here is what I think is most likely:

  • With LinkedIn, Microsoft could build out its Microsoft Dynamics CRM business to reinvent the sales and marketing process, helping the company compete more directly with SalesForce.
  • LinkedIn could allow Microsoft to implement a "Log in with LinkedIn" system similar to Facebook Connect. Microsoft could turn LinkedIn profiles into a cross-platform business identity to better compete with Google and Facebook.
  • LinkedIn could allow Microsoft to build out Cortana, a workplace-tailored digital assistant. One scenario Microsoft referenced was walking into a meeting and getting a snapshot of each attendee based on his or her LinkedIn profile. This capability will allow Microsoft to better compete against virtual assistants like Google Now, Apple Siri and Amazon Echo.
  • LinkedIn could be integrated in applications like Outlook, Skype, Office, and even Windows itself. Buying LinkedIn helps Microsoft limit how Facebook and Google are starting to get into business applications.

Data is eating the world

In the past I wrote that data, not software, is eating the world. The real value in technology comes less and less from software and more and more from data. As most businesses are moving applications into the cloud, a lot of software is becoming free, IT infrastructure is becoming a metered utility, and data is what is really makes or breaks business results. Here is one excerpt from my post: "As value shifts from software to the ability to leverage data, companies will have to rethink their businesses. In the next decade, data-driven, personalized experiences will continue to accelerate, and development efforts will shift towards using contextual data.". This statement is certainly true in Microsoft / LinkedIn's case.

Microsoft linkedin graphs

Source: Microsoft.

If this deal shows us anything, it's about the value of user data. Microsoft paid more than $60 per registered LinkedIn user. The $26.2 billion price tag values LinkedIn at about 91 times earnings, and about 7 percent of Microsoft's market cap. This is a very bold acquisition. You could argue that this is too hefty a price tag for LinkedIn, but this deal is symbolic of Microsoft rethinking its business strategy to be more data and context-centric. Microsoft sees that the future for them is about data and I don't disagree with that. While I believe acquiring LinkedIn is a right strategic move for Microsoft, I'm torn over whether or not Microsoft overpaid for LinkedIn. Maybe we'll look back on this acquisition five years from now and find that it wasn't so crazy, after all.

Demandware acquisition heats up the customer experience market

The battle for the marketing cloud just got way more interesting. This week, Salesforce announced its acquisition of Demandware for $2.8B in cash. It will enable Salesforce to offer a "Commerce Cloud" alongside its sales and marketing solutions.

The large platform companies like Oracle and Adobe are trying to own the digital customer experience market from top to bottom by acquiring and integrating together tools for marketing, commerce, customer support, analytics, mobile apps, and more. Oracle's acquisition of Eloqua, SAP's acquisition of hybris and Salesforce's acquisitions of ExactTarget were earlier indicators of market players consolidating SaaS apps for customer experience onto their platforms.

In my view, the Demandware acquisition is an interesting strategic move for Salesforce that aligns them more closely as a competitor to marketing stack mega-vendors such as Adobe, Oracle and IBM. Adding a commerce solution to its suite, makes it easier for Salesforce's customers to build an integrated experience and see what their customers are buying. There are advantages to integrated solutions that have a single system of record about the customer. The Demandware acquisition also makes sense from a technology point of view; there just aren't many Java-based commerce platforms that are purely SaaS-based, that can operate at scale, and that are for sale.

However, we've also seen this movie before. When big companies acquire smaller, innovative companies, over time the innovation goes away in favor of integration. Big companies can't innovate fast enough, and the suite lock-in only benefits the vendor.

There is a really strong case to be made for a best-of-breed approach where you choose and integrate the best software from different vendors. This is a market that literally changes too much and too fast for any organization to buy into a single mega-platform. From my experience talking to hundreds of customer organizations, most prefer an open platform that integrates different solutions and acts as an orchestration hub. An open platform ultimately presents more freedom for customers to build the exact experiences they want. Open Source solutions, like Drupal, that have thousands of integrations, allow organizations to build these experiences in less time, with a lower overall total cost of ownership, more flexibility and faster innovation.

Adobe clearly missed out on buying Demandware, after it missed out on buying Hybris years ago. Demandware would have fit in Adobe's strategy and technology stack. Now Adobe might be the only mega-platform that doesn't have an embedded commerce capability. More interestingly, there don't appear to be large independent commerce operators left to buy.

I continue to believe there is a great opportunity for new independent commerce platforms, especially now Salesforce and Demandware will spend the next year or two figuring out the inevitable challenges of integrating their complex software solutions. I'd love to see more commerce platforms emerge, especially those with a modern micro-services based architecture, and an Open Source license and innovation model.

Video: Can we save the open web?

In March, I did a presentation at SxSW that asked the audience a question I've been thinking about a lot lately: "Can we save the open web?".

The web is centralizing around a handful of large companies that control what we see, limit creative freedom, and capture a lot of information about us. I worry that we risk losing the serendipity, creativity and decentralization that made the open web great.


The open web closing

While there are no easy answers to this question, the presentation started a good discussion about the future of the open web, the role of algorithms in society, and how we might be able to take back control of our personal information.

I'm going to use my blog to continue the conversation about the open web, since it impacts the future of Drupal. I'm including the video and slides (PDF, 76 MB) of my SxSW presentation below, as well as an overview of what I discussed.

Here are the key ideas I discussed in my presentation, along with a few questions to discuss in the comments.

Idea 1: An FDA-like organization to provide oversight for algorithms. While an "FDA" in and of itself may not be the most ideal solution, algorithms are nearly everywhere in society and are beginning to impact life-or-death decisions. I gave the example of an algorithm for a self-driving car having to decide whether to save the driver or hit a pedestrian crossing the street. There are many other life-or-death examples of how unregulated technology could impact people in the future, and I believe this is an issue we need to begin thinking about now. What do you suggest we do to make the use of algorithms fair and trustworthy?

Idea 2: Open standards that will allow for information-sharing across sites and applications. Closed platforms like Facebook and Google are winning because they're able to deliver a superior user experience driven by massive amounts of data and compute power. For the vast majority of people, ease-of-use will trump most concerns around privacy and control. I believe we need to create a set of open standards that enable drastically better information-sharing and integration between websites and applications so independent websites can offer user experiences that meet or exceeds that of the large platforms. How can the Drupal community help solve this problem?

Idea 3: A personal information broker that allows people more control over their data. In the past, I've written about the idea for a personal information broker that will give people control over how, where and for how long their data is used, across every single interaction on the web. This is no small feat. An audience member asked an interesting question about who will build this personal information broker -- whether it will be a private company, a government, an NGO, or a non-profit organization? I'm not really sure I have the answer, but I am optimistic that we can figure that out. I wish I had the resources to build this myself as I believe this will be a critical building block for the web. What do you think is the best way forward?

Ultimately, we should be building the web that we want to use, and that we want our children to be using for decades to come. It's time to start to rethink the foundations, before it's too late. If we can move any of these ideas forward in a meaningful way, they will impact billions of people, and billions more in the future.

Can we save the open web?

The web felt very different fifteen years ago, when I founded Drupal. Just 7 percent of the population had internet access, there were only around 20 million websites, and Google was a small, private company. Facebook, Twitter, and other household tech names were years away from being founded. In these early days, the web felt like a free space that belonged to everyone. No one company dominated as an access point or controlled what users saw. This is what I call the "open web".

But the internet has changed drastically over the last decade. It's become a more closed web. Rather than a decentralized and open landscape, many people today primarily interact with a handful of large platform companies online, such as Google or Facebook. To many users, Facebook and Google aren't part of the internet -- they are the internet.

I worry that some of these platforms will make us lose the original integrity and freedom of the open web. While the closed web has succeeded in ease-of-use and reach, it raises a lot of questions about how much control individuals have over their own experiences. And, as people generate data from more and more devices and interactions, this lack of control could get very personal, very quickly, without anyone's consent. So I've thought through a few potential ideas to bring back the good things about the open web. These ideas are by no means comprehensive; I believe we need to try a variety of approaches before we find one that really works.

Double-edged sword

It's undeniable that companies like Google and Facebook have made the web much easier to use and helped bring billions online. They've provided a forum for people to connect and share information, and they've had a huge impact on human rights and civil liberties. These are many things for which we should applaud them.

But their scale is also concerning. For example, Chinese messaging service Wechat (which is somewhat like Twitter) recently used its popularity to limit market choice. The company banned access to Uber to drive more business to their own ride-hailing service. Meanwhile, Facebook engineered limited web access in developing economies with its Free Basics service. Touted in India and other emerging markets as a solution to help underserved citizens come online, Free Basics allows viewers access to only a handful of pre-approved websites (including, of course, Facebook). India recently banned Free Basics and similar services, claiming that these restricted web offerings violated the essential rules of net neutrality.

Algorithmic oversight

Beyond market control, the algorithms powering these platforms can wade into murky waters. According to a recent study from the American Institute for Behavioral Research and Technology, information displayed in Google could shift voting preferences for undecided voters by 20 percent or more -- all without their knowledge. Considering how narrow the results of many elections can become, this margin is significant. In many ways, Google controls what information people see, and any bias, intentional or not, has a potential impact on society.

In the future, data and algorithms will power even more grave decisions. For example, code will decide whether a self-driving car stops for an oncoming bus or runs into pedestrians.

It's possible that we're reaching the point where we need oversight for consumer-facing algorithms. Perhaps it's time to consider creating an oversight committee. Similar to how the FDA monitors the quality and safety of food and drugs, this regulatory body could audit algorithms. Recently, I spoke at Harvard's Berkman Center for the Internet and Society, where attendees also suggested a global "Consumer Reports" style organization that would "review" the results of different company's algorithms, giving consumers more choice and transparency.

Gaining control of our personal data

But algorithmic oversight is not enough. In numbers by the billions, people are using free and convenient services, often without a clear understanding of how and where their data is being used. Many times, this data is shared and exchanged between services, to the point where people don't know what's safe anymore. It's an unfair trade-off.

I believe that consumers should have some level of control over how their data is shared with external sites and services; in fact, they should be able to opt into nearly everything they share if they want to. If a consumer wants to share her shoe size and color preferences with every shopping website, her experience with the web could become more personal, with her consent. Imagine a way to manage how our information is used across the entire web, not just within a single platform. That sort of power in the hands of the people could help the open web gain an edge on the hyper-personalized, easy-to-use "closed" web.

In order for a consumer-based, opt-in data sharing system described above to work, the entire web needs to unite around a series of common standards. This idea in and of itself is daunting, but some information-sharing standards like OAuth have shown us that it can be done. People want the web to be convenient and easy-to-use. Website creators want to be discovered. We need to find a way to match user preferences and desires with information throughout the open web. I believe that collaboration and open standards could be a great way to decentralize power and control on the web.

Why does this matter?

The web will only expand into more aspects of our lives. It will continue to change every industry, every company, and every life on the planet. The web we build today will be the foundation for generations to come. It's crucial we get this right. Do we want the experiences of the next billion web users to be defined by open values of transparency and choice, or the siloed and opaque convenience of the walled garden giants dominating today?

I believe we can achieve a balance between companies' ability to grow, profit and innovate, while still championing consumer privacy, freedom and choice. Thinking critically and acting now will ensure the web's open future for everyone.

(I originally wrote this blog post as a guest article for The Daily Dot. I also gave a talk yesterday at SXSW on a similar topic, and will share the slides along with a recording of my talk when it becomes available in a couple of weeks.)

Should we prioritize technological advances?

This blog post is co-authored with Devesh Raj, Senior Vice President and Head of Strategy and Planning at Comcast-NBCU. Devesh and I are friends and both Young Global Leader at the World Economic Forum. In this blog post we share some of our observations and thoughts after attending the World Economic Forum's annual meeting in Davos.

This year's World Economic Forum Annual Meeting in Davos focused on the Fourth Industrial Revolution, a term coined by Klaus Schwab to describe the new generation of technological advances – sensors, robotics, artificial intelligence, 3D printing, precision medicine – coming together to define the next wave of progress.

These new technologies have the potential to transform our lives. Beyond sci-fi like scenarios – such as each of us having our own personal R2-D2, summoning our Batmobile, or colonizing Mars – these advances also have the potential to solve many real-world problems. With more intelligent, automated technology, we could generate renewable energy, address climate change, connect billions of people to the internet, develop affordable housing solutions and cure chronic diseases.

These advances are not far into the future. A recent report on Technology Tipping Points and Societal Impact anticipates many such moments of inflection within our lifetimes – in fact, we may see major advances in transportation, artificial intelligence, and new payment technology as soon as the next decade. Yet, somewhat surprisingly, much of the discussion in Davos last month focused on the negative impacts of these technologies, rather than their positive potential.


The average year that each tipping point is expected to occur. Source: WEF report.
2018 2021 2022 2023 2024 2025 2026
- Storage for all - Robots and services - The Internet of Things
- Wearable internet
- 3D printing and manufacturing
- Implantable technologies
- Big Data for decisions
- Vision as the new interface
- Our digital presence
- Governments and the block chain
- A supercomputer in your pocket
- Ubiquitous computing
- 3D printing and human health
- The connected home
- 3D printing and consumer products
- AI and white-collar jobs
- The sharing economy
- Driverless cars
- AI and decision-making
- Smart cities

One consistent, fearful theme was the potential for job losses. As automation continues to replace manufacturing or blue collar jobs, artificial intelligence will subsequently do the same for skilled, white collar jobs in banking, law or medicine. Estimates as to the impact this will have on jobs vary, but many prognostications in Davos suggested a depressive impact on the global economy. While it's true that technological leaps have often eliminated older, human-powered methods of doing things, many in Davos also recognized that advances in technology create new jobs, most of which we can't even dream of today. For example, the invention of the airplane created hundreds of thousands of jobs, from pilots, to stewards, to airport personnel, to international agents and more prognostications not to mention the transformative economic impact of billions of people traveling vast distances in a short span of time.

A second concern at Davos was growing inequality in the world between "digital haves" and "have-nots". This was reflected both as a challenge among nations – developed vs. developing – but also an issue for specific socio-economic groups within individual nations, some of which arguably are still not past the second or third industrial revolution. What does 3D printing or precision medicine do, for example, for rural parts of India and Africa that still don't have reliable electricity, while urban centers in those same countries race towards an era of smart, automated living?

A third common concern (particularly driven by robotics and artificial intelligence) was the "dehumanization" of our lives. There was a case for a renewed emphasis on qualities that make us uniquely human – empathy, sensitivity, creativity and inspiration.

Another issue centered on the ethical and moral challenges of many advances. Some conversations at Davos discussed the dangerous potential of eugenics-like scenarios in medicine, enabled by advances such as CRISPR/Cas9. On the flip side, could machines make positive decisions regarding human lives, such as a self-driving car making a choice between hitting a pedestrian or sacrificing its passenger?

One could argue some of these concerns are overblown Luddism. But in some ways, it doesn't matter – the march of technological progress is inevitable, as it has always been. Certainly, no one at Davos suggested slowing down the pace of technological advancement. The gist of the discussions was that we should figure out how to avoid, or address, the negative, unintended consequences of these changes.

We believe there is a major challenge with the Fourth Industrial Revolution that didn't get adequate attention in Davos – the issue of prioritization.

To date, the technological innovation that has driven the Fourth Industrial Revolution is shaped by the commercial prospects of small or large firms in the market. After all, one definition of "innovation" is the commercial application of invention. As an example, investment in alternative energy R&D fluctuates depending on oil prices, just as demand for hybrid or electric vehicles become more or less attractive depending on gasoline prices.

What if, instead of being driven solely by commercial returns, we could focus the Fourth Industrial Revolution more directly on the big problems our world faces? What if we could prioritize technological advances that have the most beneficial impact to society?

The world has recently defined its problems very clearly in a set of 17 Sustainable Development Goals (Wikipedia), also known as the Global Goals, that were adopted by all countries last year to "end poverty, protect the planet and ensure prosperity for all". The goals cover poverty, hunger and food security, health, education, energy, and water and sanitation – to name a few. A successor list to the earlier Millennium Development Goals, the Sustainable Development Goals get quite specific.

Take Goal 3 as an example: "Ensure healthy lives and promote well-being for all at all ages". This goal is linked to 12 targets, including these top three:

  • By 2030: reduce the global maternal mortality ratio to less than 70 per 100,000 live births.
  • By 2030: end preventable deaths of newborns and children under 5 years of age, with all countries aiming to reduce neonatal mortality to at least as low as 12 per 1,000 live births and under-5 mortality to at least as low as 25 per 1,000 live births.
  • By 2030: end the epidemics of AIDS, tuberculosis, malaria and neglected tropical diseases and combat hepatitis, water-borne diseases and other communicable diseases.

Of course, technological advancement is not the only solution to all Sustainable Development Goals – there is much more to do – but it is likely one of the major contributors.

As the world thinks through how to harness the Fourth Industrial Revolution, we think it is worth questioning which technologies we should be prioritizing to meet these Sustainable Development Goals. How do we draft policies and create economic incentives to encourage the right types of technology advances? What should governments and the private sector do differently to focus technology on addressing these goals? How do we direct the energy and creativity of millions of entrepreneurs towards improving the state of the world?

The world's innovation system is powerful and has generally worked well. However, it could use a guiding hand to nudge it in a direction that will benefit the planet beyond the incentives of commercial returns. Expanding our criteria for importance to solving areas of global need is not an inherently anti-capitalist idea. But it is one that would channel capitalism in the best direction for humanity as a whole. That, we hope, is the real agenda initiated by the focus in Davos on the Fourth Industrial Revolution, which the world will seek to address in the coming year.

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