MSFT Microsoft Corporation

By Rachael King 

Salesforce.com Inc. said it would press regulators in the U.S. and Europe to block Microsoft Corp.'s $26.2 billion acquisition of LinkedIn Corp., arguing the deal would hurt competition by giving its business-software rival too much control over the social-networking company's vast pool of data.

Salesforce's public broadside against the deal on Thursday came three months after it lost a bidding war for LinkedIn to Microsoft. Both companies' interest in LinkedIn centers on data generated by its members, who typically maintain career résumés on the site. LinkedIn claims 450 million members in more than 200 countries, including 106 million monthly active uses.

Burke Norton, Salesforce's chief legal officer, said owning LinkedIn would give Microsoft an unfair competitive advantage because it could block rivals' access to the data on its membership. He said the deal also raises "data privacy issues" that Salesforce thinks U.S. and European Union authorities should scrutinize.

"Microsoft's proposed acquisition of LinkedIn threatens the future of innovation and competition," Mr. Norton said in a statement.

Microsoft responded by pointing out that the deal had already passed regulatory muster in some countries, and that it is Salesforce, not Microsoft, that dominates the market for software that handles customer relationship management, or CRM -- a market in which LinkedIn's data may help Microsoft compete against Salesforce.

"Salesforce may not be aware, but the deal has already been cleared to close in the United States, Canada, and Brazil," said Brad Smith, Microsoft's chief legal officer. "We're committed to continuing to work to bring price competition to a CRM market in which Salesforce is the dominant participant charging customers higher prices today."

Antitrust issues arising from the acquisition of immense data sets have been raised in technology mergers in both the EU and the U.S., but no merger has been derailed on those grounds, according to Michael Carrier, a professor at Rutgers Law School who specializes in antitrust issues. European regulators examined the competitive and privacy implications of Google's acquisition of DoubleClick and Facebook Inc.'s purchase of WhatsApp. The EU regulators ultimately approved them.

The European Union antitrust watchdog signaled Thursday that big data will continue to play a role in assessing merger deals. In a speech, the EU's competition chief, Margrethe Vestager, said she would "keep a close eye on how companies use that data."

The EU's review of Microsoft's purchase of LinkedIn likely will focus on whether the professional network's data "has a very long durability or might constitute a barrier for others," Ms. Vestager told Bloomberg after the merger was announced.

Salesforce's argument could work against it if the company were to acquire the social network Twitter Inc., as The Wall Street Journal and others have reported it is trying to do. Moreover, Salesforce's contention that Microsoft might deny competitors access to LinkedIn's data would have applied equally to Salesforce if it had been successful in its effort to acquire the network.

People familiar with the matter noted that no outside entity currently has unlimited access to LinkedIn trove of data.

LinkedIn's data is potentially valuable because large data sets are critical to the development of artificial intelligence, a technology that both Microsoft and Salesforce have said they are counting on to drive growth.

Salesforce hasn't filed a formal complaint against Microsoft in connection with its purchase of LinkedIn, according to people familiar with the matter. However, the company filled out a questionnaire sent by the European Commission, which solicits information from companies potentially affected by mergers and acquisitions as part of its normal preregistration process. Microsoft hasn't yet registered the deal with EU authorities.

Nonetheless, Salesforce's announcement of its intention to fight the deal is an unusually proactive and public stance so early in the acquisition process. Generally, competitors hold their opposition until a merger has been registered with regulators.

"We intend to work closely with regulators, lawmakers and other stakeholders to make the case that this merger is anticompetitive," Mr. Norton said.

Salesforce tried to outbid Microsoft for LinkedIn, according to people familiar with the effort. However, Salesforce continued to submit bids after Microsoft and LinkedIn entered into an exclusive deal, according to those people and regulatory filings.

Chief Executive Marc Benioff later sent an email to LinkedIn CEO Jeff Weiner and LinkedIn Chairman Reid Hoffman after reading a July 1 regulatory filing that detailed events leading up to the deal. Mr. Benioff wrote in the email that he would have offered a "much higher" price had LinkedIn continued talks with him after its call for final offers, according to a July 22 company filing.

--Jay Greene, Natalia Drozdiak and Deepa Seetharaman contributed to this article.

Write to Rachael King at rachael.king@wsj.com

(END) Dow Jones Newswires

September 30, 2016 02:48 ET (06:48 GMT)

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