Microsoft reportedly tried (and failed) to buy Pinterest — we're looking at why

Wednesday, February 17, 2021 by Robinhood Snacks | Disclosures

Finding inspo in a Word Doc... feels almost as hard as Microsoft's failed acquisition attempts. Last year, Microsoft was trying to buy TikTok’s US operations for a whopping ~$50B. Not only did it lose the bid, but the entire sale got scrapped indefinitely. Last week, we learned that Microsoft reportedly tried to buy Pinterest, which is valued at ~$51B. It would’ve been Microsoft's biggest acquisition ever. But it got shut down there too, according to the FT.

These moves seem as random as Bing... which, BTW, Microsoft also owns. Besides Xbox and LinkedIn, which it bought in 2016 for $26.2B, Microsoft hasn't really ventured into the consumery social world. So why does it seem interested in social splurges?

  • Ads: The digital ad market is growing fast: Facebook, Snap, and Google all reported blowout earnings last quarter. Microsoft wants a slice of the pie to better compete with Google and Amazon (Bing search ads aren't cutting it).
  • Cloud(s): By acquiring hundreds of millions of users from TikTok or Pinterest, Microsoft would gain a massive base for its Azure cloud platform. FYI: LinkedIn is currently one of Azure's top 10 cloud customers. But...

Shopping might be the main reason... why Microsoft has eyed social apps. In 2019, Microsoft launched a cloud commerce solution to help customers create online shopping experiences. It also bought ecommerce advertising startup PromoteIQ. By buying a company like TikTok, which has started experimenting with in-app shopping, Microsoft could make sure that sales happen through its own cloud solutions. It's a triple whammy of cloud growth, ad sales, and valuable customer data that positions it against Rival #1: Amazon. Etsy could be a good next target. At $28B, it would be a relative steal for Microsoft.