Microsoft made an approach to buy Pinterest

Microsoft approached Pinterest in recent months about a potential deal to acquire the $51bn social media company popular with hobbyists posting home decor, food and wedding collages, people briefed on the matter said.

The talks were currently not active, said one of the people briefed about the matter. Microsoft has been pursuing an acquisition strategy aimed at amassing a portfolio of active online communities that can run on top of its cloud computing platform.

Pinterest, whose market value has increased more than 600 per cent during the coronavirus pandemic, has signalled in the past that it desired to remain an independent company.

Its soaring stock price would present a hurdle to Microsoft, whose shares have risen nearly 80 per cent from its pandemic low, though Pinterest’s market value is only about 3 per cent of Microsoft’s $1.83tn. 

A purchase of Pinterest, which would have amounted to the largest deal ever for Microsoft, would also have tested the Biden administration’s appetite for allowing powerful technology companies to strike deals.

However, Microsoft, which mainly sells to businesses and governments rather than consumers, has avoided most of the political backlash that has made it more difficult for Facebook and Google to make big acquisitions.

Microsoft first revealed its interest in acquiring a prominent social media company last year when it tried to buy the US operations of TikTok, a popular Chinese video app that was under pressure to divest its US business following national security concerns raised by the Trump administration. The bid for TikTok failed after rival Oracle gatecrashed the talks. 

Microsoft has made several acquisitions in recent years. Besides buying professional networking site LinkedIn for $26bn in 2016, it has acquired GitHub, a code repository that doubles as a network for software developers, and Minecraft, an online game that last year passed 131m users. Last year, it acquired private gaming company ZeniMax for $7.5bn.

Microsoft has looked to online communities as a way to bring large-scale applications to its Azure cloud platform. Pinterest, which last week said its monthly users had grown to 459m, currently relies on Amazon Web Services as its infrastructure provider.

Ownership of sites with large numbers of active users, many of them posting frequently, has also provided valuable data for Microsoft’s other businesses. Data from LinkedIn, for instance, is used to “customise” other Microsoft apps and services, the network says.

A social media site where millions of users post images of things they are interested in or might want to buy on “boards” could turn into an important source of data for customers of Microsoft’s marketing services, while also acting as raw material for training the company’s AI systems.

Pinterest, which made its stock market debut in April 2019, has been a beneficiary of a pandemic-related surge in usage as people have stayed at home during lockdowns, and business has shifted away from brick and mortar stores to selling online. 

Last week, it posted a 76 per cent rise in quarterly revenues, sending the shares up more than 10 per cent. It has been broadening its advertiser base, introducing new ad formats and ecommerce opportunities that bring it in line with similar developments at rivals Facebook and TikTok. 

Because of the nature of its content, the world’s most wholesome social network has also largely avoided the scrutiny faced by other platforms over content moderation failures.

Microsoft and Pinterest declined to comment.