Sources of the USA Herald say Microsoft is considering an Upwork acquisition. According to the rumor, Microsoft’s recent partnership with the freelancer platform was a precursor to this.
The tech giant recently created a system for companies to loan tools like Office 365 to freelancers. On its announcement three weeks ago, Microsoft said the Office 365 Freelance toolkit would have profound implications for companies.
Such a move would give Microsoft further dominance over professional data. With its acquisition of LinkedIn, the company gained access to a treasure trove of information. An Upwork acquisition would put 12 million freelancers and 5 million clients under its wing.
Unfortunately, the USA Herald’s credibility is unclear, and this is muddied further by the disclaimer that many of its staff “made an investment in UPWRK”. It also has a long history of promoting the platform.
As such, it’s best to treat this as little more than a rumor. It would certainly make sense for Microsoft, but Upwork has faced its own struggles over the past few years.
Upwork’s Fee Changes
Elance oDesk was rebranded to the catchier Upwork in 2015, but it soon made sweeping changes in a bid to be more profitable. In early 2016, the company upped its fees to 20% for the first $500 with a client.
The move contrasted heavily with the company’s previous 10% blanket fee. Now, users would pay 10% for clients with $500.1-$10,000 earnings, and 5% above that. On top of this, employers must pay 2.75% for each transaction. Freelancers have to pay an additional $10 a month for the service if they want advantages over the competition.
The change made many freelancers on the platform unhappy, prioritizing industries with long-term contracts or those who work full-time. In November, shortly after becoming a public company, Upwork’s stock plunged and is yet to fully recover.
It’s clear there needs to be a balance between fees and profitability, and Microsoft could be a strong choice to strike it. It’s in a better financial position, and its existing ownership of LinkedIn could power direct integrations. Currently, though, we’ve seen little evidence an acquisition is on the table.