The latest news on Thursday showed that LinkedIn, the workplace social service platform acquired by Microsoft for $27 billion, has shelved the process of moving the website from physical servers to Microsoft Azure cloud services. Affected by this news, Microsoft fell nearly 2% after opening on Thursday. LinkedIn first proposed this cloud migration plan called "Blue Transformation" in July 2019. However, according to people familiar with the matter,In fact, since last year, there has been internal news that the project has been shelved.


(LinkedIn announced its shift to Azure cloud services in 2019, source: company official website)

According to a memo obtained by the media, LinkedIn Chief Technology Officer Raghu Hiremagalur told R&D employees in June last year,The company will focus its efforts on expanding and innovating "local infrastructure." A memo also shows that Microsoft and LinkedIn have agreed to temporarily suspend LinkedIn from running on the Azure cloud.

This can also be considered an embarrassment for Microsoft, the second largest technology stock in the United States. The company is currently trying to catch up with Amazon AWS's market position. In addition, Nadella, who made the decision to acquire LinkedIn, was originally promoted from the position of head of Microsoft cloud services.

Overall, this matter has good news and bad news for Microsoft Azure cloud.

Let’s talk about the good news first. An important reason why LinkedIn does not use its own parent company’s cloud services is thatThe demand for Azure cloud services is so hot. Hiremagalur said in the memo that given the staggering demand Azure is currently seeing and the growth of the platform itself, the two parties have decided to pause the migration work in order to allocate resources to Azure's external customers.

The bad news is that Azure doesn't seem to be meeting LinkedIn's needs either. People familiar with the matter said that problems arose during the migration process.LinkedIn wants to use its own software tools rather than those available on Azure. So the company is building an additional data center to handle computing power needs.

Regarding this report, a spokesperson for LinkedIn basically confirmed it and also gave the parent company Microsoft enough face.

The spokesperson said the company is using Azure to supplement our infrastructure needs while further investing in the company's data centers. The company currently has more than 100 employee-facing programs running on Azure and also uses Azure Front Door, a content delivery network that stores information in multiple locations around the world for rapid delivery to devices. Regarding self-operated data centers, the company is working hard to consolidate data centers distributed in different places under one roof.

Of course, this can also be said in reverse - LinkedIn does not seem to have a high priority in Microsoft's "cloud" sequence. Under Nadella, Microsoft has put together a number of acquisitions in recent years.Assets were transferred to the Azure platform, including code platform GitHub and game "Minecraft" developer Mojang. Not to mention OpenAI, which has been held in the hands of Microsoft for the past year, and the large model that drives ChatGPT has been running in Microsoft's digital infrastructure.

In Microsoft's recent Q3 financial report, the revenue growth rate of Azure and other cloud services was 29%, while LinkedIn's revenue growth rate was only 8%.