What happened
Shares of Pinterest (PINS +0.43%) climbed 7.3% on Thursday on reports that it had held talks with Microsoft (MSFT 1.92%) regarding a potential acquisition.
So what
Microsoft approached Pinterest about a possible deal, according to The Financial Times, though the talks are reportedly no longer active. Pinterest's stock price is up 32% so far in 2021 and 258% over the past year, which likely made it difficult for the two companies to agree on a price. Critics have slammed Microsoft for overpaying for acquisitions in the past, and the tech giant does not want to repeat those mistakes.
Microsoft was reportedly tempted by Pinterest's surging user growth. Image source: Getty Images.
Moreover, the deal would no doubt face regulatory scrutiny. Many government officials have expressed concern about the growing power of large technology companies, particularly as it relates to their ability to sway public opinion via social media.
Now what
It's easy to see why Microsoft would be interested in Pinterest. The popular image-sharing site added more than 100 million active users in 2020. People have flocked to its platform during the coronavirus pandemic to find inspiration in images related to their passions. Pinterest's revenue, in turn, soared 48% year over year to $1.7 billion.
Microsoft, meanwhile, has been on the hunt for rapidly expanding social media sites that could help fuel the growth of its Azure cloud computing service. Pinterest currently uses Amazon Web Services for its cloud infrastructure needs.
