The master algorithm by Pedro Domingos. What one of Bill Gates’ favourite books says about LinkedIn acquisition
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Microsoft’s acquisition of LinkedIn is the largest in giant’s history and was hardly expectable[1]. Brilliant analysis of the deal may be found in multiple sources. However, one may suggest that the current narrative is too focused on immediate results and current opportunities rather than the future options for the software giant.
A dive into one of the Bill Gates’ favorite books may add valuable insights and explain the role of LinkedIn in the Microsoft’s push into artificial intelligence (AI).
Putting the deal into the context
1) The current narrative about the deal puts it into the context of Microsoft’s past and battles it did not win, whether in social media or cloud computing. For example:
‘The deal is a way for Microsoft, which largely missed out on the consumer Web boom dominated by the likes of Google and Facebook to sprint ahead in social tools…’[2];
‘[LinkedIn’s] data could prove valuable to Microsoft as it attempts to build offerings for managing relationships with customers and to compete with Salesforce, a firm it reportedly tried to buy last year.’[3]
However, the deal of that magnitude deserves to be considered from the perspective of the future. It lays, according to Bill Gates, in artificial intelligence:
‘Certainly, [AI] is the most exciting thing going on…It’s the Holy Grail. It’s the big dream that anybody who’s ever been in computer science has been thinking about’[4].
Therefore, the counterintuitive suggestion is to think about the acquisition of a social-media asset in the context of building foundations for the future leadership in AI.
2) Ambitions have to be factored in. Microsoft was born as a foundational company for the PC era. Starting from BASIC, a programming language, and following by other products including operating systems and the office suite, Microsoft’s products were in the core of PC era.
Taking into account Microsoft’s place in the ecosystem and its ambitions (remember ‘A computer on every desk and in every home’), it is plausible to expect that the deal should allow Microsoft to remain a foundational company of the future. Not the one that provides valuable, but specialized products, say sales tools or CRM.
3) Improvements in current products and processes at Microsoft’s scale is really a big deal. LinkedIn as an additional sales channel[5] or as an enabler of new features for Cortana[6] may bring lavish revenues. Cost-savings also may be considered[7]. At the same time, limiting the deal of such magnitude by the current offerings and cost-savings does not seem to be adequate. Therefore, the role of LinkedIn in new products have to be explored.
In summary, my suggestion is to look at the deal as a way to open opportunities for new products that will have an impact comparable with the impact of MS Windows or Office. Otherwise, why spend $26B?
LinkedIn: the home of virtual workforce
‘The Master Algorithm’ by Pedro Domingos was recommended by Bill Gates[8] and helps to find a role LinkedIn may play in projecting Microsoft’s leadership into AI powered future.
The book suggests that millions of AI’s may create a virtual workforce of the future. Microsoft’s acquisition of LinkedIn puts the company in the middle of this opportunity.
According to Domingos, at a certain point, as cognitive technologies progress, an algorithm ‘…already seeded with everything we could teach it about human life. …would learn a model of you, and you could carry it in a thumb drive’. The author continues, ‘[everyone] will have a detailed model of him- or herself, and these models will talk to each other all the time.’
Building personal models with the help of LinkedIn seems too fantastic. Nevertheless, developing of generic models of certain profession does not seem too crazy. Startups actively work on virtual assistants, customer service reps and intelligent tools that take over parts of sales professionals’ tasks. Even though certain tasks are automated, the road to the holistic model of a certain job that includes a required set of tasks is ahead.
LinkedIn with its 414M members is well-positioned to become the starting point of a virtual world populated by models of almost any employee in the United States or at least by generic models of certain professions. It also may become the platform for models to ‘… negotiate the world on your behalf…’
Building a virtual workforce
The picture sketched by Pedro Domingos is definitely global enough to match Microsoft’s pedigree of a ubiquitous company. The question is how achievable is to build millions of models?
From a helicopter view, the deal gives Microsoft a great opportunity to connect own knowledge graph with LinkedIn’s one[9].
For example, by studying millions of profiles of marketing managers and comparing them with millions of documents they create and interact with, it may allow Microsoft’s AI to understand what being a marketing manager really is. Matching LinkedIn profiles against corporate organizational charts and documents flows may allow an AI to grasp business processes and to get a bigger picture of how the world functions.
From a technological point of view, LinkedIn is rumored to be profound in data science and Microsoft as well has put a lot of efforts into its AI push[10]. Microsoft invested in R&D related to building knowledge graphs and acquired tenths of companies working in cognitive technologies space[11].
Admittedly, there is a lot of wishful thinking in linking the acquisition of the social network with AI. There are many reasons why assumptions behind this article might be wrong. Bill Gates is not the CEO of Microsoft, and his private reading interests may have nothing in common with the company’s strategy. Building even a general model of certain professions may not be technologically plausible in the near future. Finally, the deal may appear just another ‘…short-term investment story that will encourage investors to put a very high price on Microsoft’s shares’[12].
However, even if the acquisition has nothing to do with AI, thinking about any asset and any opportunity in the context of AI may become a beneficial strategy in the dawn of ‘algorithm economy’.
Sources:
[1] http://venturebeat.com/2016/06/13/microsofts-5-largest-acquisitions-before-todays-26b-linkedin-deal/
[2] http://www.bloomberg.com/news/articles/2016-06-13/microsoft-to-buy-linkedin-in-deal-valued-at-26-2-billion-ipe079k9
[3] http://www.economist.com/news/business-and-finance/21700605-it-one-most-expensive-tech-deals-history-it-may-not-be-smartest-making-sense
[4] http://www.bloomberg.com/news/articles/2016-06-23/artificial-intelligence-has-a-sea-of-dudes-problem
[5] https://techcrunch.com/2016/06/13/microsoft-to-buy-linkedin-for-26b-in-cash-makes-big-move-into-enterprise-social-media/
[6] http://www.bloomberg.com/news/articles/2016-06-13/microsoft-to-buy-linkedin-in-deal-valued-at-26-2-billion-ipe079k9
[7] https://hbr.org/2016/06/is-the-linkedin-acquisition-microsofts-attempt-to-build-its-own-alphabet
[8] http://qz.com/698334/bill-gates-says-these-are-the-two-books-we-should-all-read-to-understand-ai/
[9] http://www.zdnet.com/article/why-microsoft-just-bought-linkedin-its-all-about-the-data/
[10] http://www.economist.com/news/business-and-finance/21700605-it-one-most-expensive-tech-deals-history-it-may-not-be-smartest-making-sense
[11] See more on Microsoft’s investments in cognitive tech: https://medium.com/friends-of-ai-society/microsoft-is-becoming-m-ai-crosoft-cognitive-technologies-research-and-investments-of-the-software-51271879b8b4#.dwkhmn86n
[12] http://www.ft.com/cms/s/0/15b6631c-35fb-11e6-a780-b48ed7b6126f.html#axzz4CQQ1yJKW