Will Microsoft Acquire Adobe?

Microsoft took advantage of the Adobe Summit in March to get in front of 17,000 marketers and tout its partnership with Adobe. Particularly, Microsoft and Adobe pushed an extension of the Open Data Initiative (ODI) partnership with SAP and their investment in Account-Based Experiences (ABX) with LinkedIn.

Was it a sign of things to come? Is Microsoft setting the stage for an acquisition of Adobe in a move to surge ahead of Salesforce in customer- and content-driven experiences? Microsoft needs a sound customer experience game. Adobe could benefit from a CRM play. A potential acquisition served as a good chunk of the scuttlebutt among attendees of the Summit who roamed the hallways at the Venetian Hotel in Las Vegas.

Will these resurfaced rumors of acquisition, which date at least back to 2010, actually lead to one of the biggest acquisitions of all-time, putting Microsoft-Adobe in the $100 billion club? Or is the constant pairing of old college buddies Satya Nadella of Microsoft and Shantanu Narayen of Adobe on stage at tech conferences just a sign of a continuing partnership and nothing more?

“For Microsoft, acquiring Adobe adds new product capabilities and platform ‘heft,’” said Bruce Cleveland, founding partner at Wildcat Venture Partners. “If the future of ecommerce and marketing is primarily driven via machine learning/digital applications, then an acquisition of Adobe could play a significant role in Microsoft’s long-term strategy to be the largest provider of enterprise and technological solutions. Microsoft does not yet have a significant marketing platform — especially one that is cloud-based — to market.”

Down to Brass Tracks, Money

Although the martech implications of a Microsoft-Adobe merger are significant, you’d have to talk money first. As of April 5, the market cap for Microsoft is $919.36 billion, and the market cap for Adobe is $130.21 billion. That’s a big bite for Microsoft and easily its largest acquisition, surpassing its $26.2 billion grab of LinkedIn.

What’s the overall enterprise technology landscape look like in these waters? Cleveland places Microsoft and Adobe in a list of “traditional providers” among SAP ($141.80 billion), Oracle ($184.55 billion) and IBM (127.10 billion). Outside of that, you have “digital providers,” according to Cleveland. They include: Google ($844.52 billion), Amazon ($900.53 billion) and Salesforce ($122.52 billion).

Microsoft will compete in the future against the digital providers: Google, Amazon and Salesforce, whom Cleveland calls the companies “fueling one of the largest technology transitions ever: digital transformation. Look at the market cap comparisons.” Further, he added, a Microsoft acquisition of Adobe may force the hand of Google or Amazon to acquire Salesforce, whether Salesforce wants this or not. A Microsoft acquisition “does make strategic sense on ‘paper,’” Cleveland said. “It may not make sense in execution.”