Microsoft aims to buy enterprise social network Yammer for US$1bn

14 Jun 2012

Microsoft is understood to be in talks with a view to buy business social network Yammer for an estimated US$1bn.

Yammer, which launched in 2008 by David Sacks and is headquartered in San Francisco, originally launched as a microblogging service for the workplace but has evolved into a full enterprise social network service and is often described as either an enterprise version of Twitter or a Facebook for business.

It is being used by more than 200,000 companies worldwide, including 80pc of Fortune 500 companies.

Yammer originally grew out of a previous start-up by Sacks called Geni and was a messaging service for internal use only.

However, it quickly grew as a status update service for workers to tell each other what they were working on.

In 2010, a communities feature was added and Yammer quickly grew as a way to connect businesses with customers, partners and suppliers.

Yammer has raised US$142m so far in venture funding from Charles River Ventures, The Founders Fund, Emergence Capital Partners, Goldcrest Investments and angel investor Ron Conway who has also invested in Irish social CRM player DataHug. A recent US$85m fundraising valued Yammer at US$500m.

Why Microsoft wants Yammer

Microsoft’s interest in Yammer is curious to say the least. Apart from its 1.6pc stake in Facebook, Microsoft has done its usual head-in-the-sand routine and ignored social media. So far.

Acquiring a business social network could be seen as a way of leapfrogging into the market and putting the software giant at the intersection of new trends shaping the enterprise.

Rumours of Yammer’s acquisition have spread like wildfire through Silicon Valley.

Last night it was with little irony that CEO Marc Benioff posted on Facebook a picture of a Microsoft sign being towed on the back of a truck, suggesting it was on its way to the Yammer offices.

Acquiring Yammer would step up the battle between Microsoft and for the hearts and minds of the fluid enterprise. In recent months – an exponent of the SaaS and cloud computing model – acquired Buddy Media for US$745m.

Social network structure image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years