With just over 310 million monthly active users, LinkedIn stands out as the undisputed leader in professional social networks. However, this company founded by the management team of PayPal had a difficult start. A year after its creation, LinkedIn had only 250 users, and the majority of them were simply acquaintances of the founders. Since 2016, LinkedIn has been part of Microsoft, making it a subsidiary of a FAANG. Chronicle of a meteoric rise !
What are FAANG?
The term ” FAANG is an acronym formed by the initials of the five American tech giants : “ G for Google, “ HAS for Apple, ” F for Facebook, “ HAS for Amazon and M for Microsoft. These companies, whose GDP is comparable to that of certain states, are also referred to as the Big Five or even Big Tech .
It should be noted that these companies do not form a group or a conglomerate in legal terms. The term ” FAANG » is therefore purely linguistic, even if it was taken up by Bruno Lemaire, Minister of the Economy and Finance, with the « FAANG tax which imposes digital services relating to the marketing of personal data and targeted advertising (turnover of more than 750 million euros in digital activities).
The impressive figures of GAFAM
The democratization of the web, the trivialization of the smartphone, technological developments and the acceleration of digitalization in the aftermath of the pandemic parenthesis have enabled FAANG to break records in terms of economic performance and valuation. It is enough to review some dithyrambic figures to see that the influence of FAANG exceeds that of certain supranational institutions:
- The cumulative turnover of FAANG far exceeds the GDP of France (2 $995 billion vs. $2.42 trillion) ;
- Apple is valued at 2 504 billion dollars… a value that corresponds to the market capitalization of all CAC 40 companies ;
- The value of FAANGs has exploded with the pandemic, with most often a growth of 100% ;
- FAANG products and services are used by virtually more than 4.6 billion people, or 60.5% of the world’s population ;
- WhatsApp, Facebook’s instant messaging application, alone has more than 2 billion users. Facebook also owns Instagram following a billion-dollar acquisition in 2012… an exorbitant amount for a company with barely 13 employees. ;
- Google captures 92% of search engine market share ;
- Amazon controls 71% of the voice technology market.
Is LinkedIn part of FAANG?
LinkedIn is a professional social network founded in 2002 near Mountain View, California… a region that also hosts the headquarters of Alphabet, parent company of Google. The company was founded by serial entrepreneur Reid Hoffman and members of the team that founded PayPal and Socialnet.com (Allen Blue, Konstantin Guericke, Eric Ly and Jean-Luc Vaillant, among others).
The slow rise of LinkedIn
After a difficult start, LinkedIn found its place in the emerging social network market in the second half of the 2000s, thanks to the enthusiasm of American SME managers. The social network was mainly acclaimed for recruitment and benchmarking.
In 2011, LinkedIn generated more than $154.6 million in advertising revenue, far ahead of Twitter. If this performance is already impressive for a social network, we remain (very) far from the dithyrambic figures of FAANG. In contrast, LinkedIn became a unicorn early on, with a valuation exceeding $1 billion in June 2008. In October 2009, Silicon Valley Insider ranked LinkedIn 10th on its list of the 100 Most Lucrative Startups.
The takeover of LinkedIn by Microsoft
However, the company suffered a blow in February 2016. Indeed, following the publication of a report on its results, shares of LinkedIn fell 43.6% in one day, with a record loss of $ 10 billion on its market capitalization.
This did not prevent the company from being acquired by Microsoft, a historic FAANG, in June 2016, for more than 26 billion dollars, or 196 dollars per share. This is, to date, the second largest acquisition made by Microsoft. The terms of this operation have not been disclosed, but the specialized press evokes a 100% cash transaction with debt financing. ” Microsoft will allow LinkedIn to retain its brand, culture and independence “, could we read in particular in the press release of the takeover. Also, Jeff Weiner, CEO of LinkedIn, was retained.
Is LinkedIn part of FAANG? Technically, yes, since June 13, 2016. More specifically, LinkedIn today belongs to Microsoft, one of the five giants of FAANG.
Why did Microsoft buy LinkedIn ?
The announcement of the takeover of LinkedIn by Microsoft surprised the tech world. In reality, the Redmond firm was stepping up its efforts to expand its professional offer for businesses. Microsoft wanted to capitalize on the 1.2 billion users of its Office suite to further establish itself in the coveted market of so-called corporate “. Having no social network, Microsoft very quickly studied the path of external growth. The idea of acquiring LinkedIn therefore came about naturally for two reasons. :
- LinkedIn is the only professional social network that has found its audience, especially in the United States ;
- The company was experiencing some profitability and cash flow issues, especially after its share price crashed in February 2016.
LinkedIn then brought Microsoft immediate access to more than 433 million users as well as an interesting presence in the very exclusive club of social networks. Microsoft will launch connectors between LinkedIn and the various solutions of its office suite. For example, software from the Office suite offers the user the possibility of contacting a Microsoft adviser via LinkedIn to help him carry out certain tasks or to request information. Also, Microsoft has integrated access to a premium LinkedIn account into its paid plans.
From 2017, the user’s LinkedIn profile became ” native on business products like Outlook, Skype, Office and even Windows. In short, the LinkedIn profile has become the pillar of the user’s identity in the eyes of Microsoft. This strategy has allowed Microsoft to collect valuable data to improve its customer knowledge and machine learning capabilities. Cortana, Microsoft’s virtual assistant tool, has started mining information on LinkedIn to answer user queries about professionals they might collaborate with.
Microsoft did not wait for the acquisition of LinkedIn to establish itself as FAANG. On the other hand, this operation has undoubtedly consolidated its place in the Big Five.
These famous companies that were bought by FAANG
To ensure their growth, the FAANGs are increasing their acquisitions, sometimes with the sole objective of ” put out of harm’s way » a potential competitor. Did you know that these tech companies were under the leadership of FAANG?
Companies that belong to FAANG Microsoft
In addition to LinkedIn, FAANG Microsoft owns companies specializing in the development of video games, telecommunications and online advertising. :
- Skype, a company acquired on May 10, 2011 for 8.5 billion dollars ;
- GitHub, a software development platform acquired on October 25, 2018 for $7.5 billion ;
- Mojang, a video game development studio, acquired on September 15, 2014 for 2.5 billion dollars ;
- aQuantive, specialist in digital advertising, acquired on August 13, 2007 for 6.3 billion dollars ;
- Nuance Communication, publisher of conversational solutions powered by Artificial Intelligence, acquired for 19.7 billion dollars.
Companies that belong to FAANG Google (Alphabet)
The FAANG Alphabet, parent company of Google, also owns many companies operating in cybersecurity, online advertising and smart objects. :
- YouTube, acquired on October 9, 2006 for $1.65 billion ;
- Motorola Mobility, acquired in May 2012 for $12.5 billion ;
- Nest Labs, maker of thermostats, acquired on January 14, 2014 for $3.2 billion ;
- IT security specialist Mandiant is currently being acquired by Google for $5.4 billion ;
- Fitbit, a specialist in connected fitness objects, was acquired on January 14, 2021 for 2.1 billion dollars.
Companies that belong to FAANG Amazon
Valued at more than 2 300 billion dollars (yes !), Amazon bet very early on an external growth strategy. The Seattle-headquartered company owns the following businesses :
- Whole Food Market, acquired August 28, 2017 for $13.7 billion ;
- Zappos, acquired on November 2, 2009 for $1.2 billion ;
- Kiva Systems, a company specializing in robotics, acquired on March 19, 2012 for 775 million dollars ;
- PillPack Inc., online pharmacy acquired on June 28, 2018 for 753 million dollars ;
- Twitch Interactive, video streaming service, acquired on August 25, 2014 for 970 million dollars.
Companies that belong to FAANG Facebook (Meta)
Facebook has arguably made the most acquisitions ” glamour in the tech world. The company, which rebranded to Meta, owns the following businesses :
- Instagram, acquired on April 9, 2012 for a billion dollars ;
- WhatsApp, instant messaging application acquired on February 19 for 19 billion dollars ;
- Oculus VR, specialist in Virtual Reality (VR) technologies, acquired on March 25, 2014 for 2 billion dollars ;
- Onavo, publisher of a mobile analytics solution, was acquired in October 2013 for an undisclosed sum (but estimated at $200 million) ;
- Beluga, an online messaging service, was acquired on March 2, 2011 for an undetermined amount.
Companies that belong to FAANG Apple
With a valuation of more than 2 At $400 billion, Amazon is the most valuable company in the world. Here are the companies that are part of his empire :
- Beats Electronics and Beats Music, acquired on August 1, 2014 at three billion dollars ;
- Siri Inc., publisher of voice assistance solutions, acquired on April 28, 2010 for 200 million dollars ;
- Shazam, music recognition application, acquired on September 24, 2018 for 400 million dollars ;
- NeXT Software, acquired December 20, 1996 for $400 million ;
- AuthenTec, a cybersecurity company, acquired on July 27, 2012 for $356 million.
To conclude…
LinkedIn is a professional social network launched in 2002 by the founding team of PayPal. After rather laborious beginnings, LinkedIn reached cruising speed in the second half of the 2000s. After suffering major losses in February 2016 (10 billion dollar market capitalization loss in one day), LinkedIn received a $26 billion buyout offer from Microsoft…a deal that closed in June 2016 . LinkedIn is therefore now part of a FAANG company.
