14 DAY TRIAL // Microsoft is now in pole position to take over TikTok, the Internet phenomenon that United States President Donald Trump wants to ban because of possible ties with the Chinese government.
And with a ban more or less imminent, parent company ByteDance has decided to sell TikTok’s operations in a number of countries, including the United States.
The takeover talks have advanced quickly in the last few weeks, and according to people familiar with the matter, the two parties were close to reaching an agreement, with an announcement in this regard expected as soon as this week.
But on the other hand, things took a different turn during the weekend when President Trump publicly said that he wants TikTok banned in the United States no matter who the owner is. The takeover talks have obviously been suspended, as Microsoft decided to seek additional clarification from the White House, as the company wouldn’t want to purchase a service that would pretty much be dead on arrival.
And now Microsoft says that the negotiations have been resumed, with an announcement expected by mid-September. Even the US government is involved in the talks, as Microsoft says it wants everything to go as smoothly as possible with no concerns in terms of user security and data privacy.
“Among other measures, Microsoft would ensure that all private data of TikTok’s American users is transferred to and remains in the United States. To the extent that any such data is currently stored or backed-up outside the United States, Microsoft would ensure that this data is deleted from servers outside the country after it is transferred,” Microsoft says.
There’s no doubt that sooner or later, Microsoft and ByteDance will reach an agreement and TikTok would end up becoming a Microsoft service. And I expect that to happen rather sooner than later, especially because President Trump is likely to favor such a deal despite his recent comments.
But at the end of the day, Microsoft buying a social network is something that’s a risky move for the software giant. And I think the whole move comes down to two different things.
First and foremost, Microsoft has been focused mostly on enterprise lately, with products like Office 365, Microsoft Teams, and Azure bringing home the bacon. The consumer side of its portfolio has progressed rather slowly, and users themselves have been frustrated with this increased focus on the enterprise.
Buying TikTok would reboot Microsoft’s push in the consumer space, and it goes without saying that Microsoft does not afford to make a mistake here. Most likely, buying TikTok is a multi-billion-dollar deal, so Microsoft just needs to get it right. While the company says “the new structure would build on the experience TikTok users currently love,” a change of owners would obviously come with a fresh direction that the Redmond-based software giant needs to think twice about before actually implementing.
With TikTok moving under its umbrella, Microsoft, once a consumer company that switched to the enterprise, partially returns to the consumer market. But is Microsoft the company that still knows how to make money out of a consumer product? This is the answer that the software giant needs to find the answer to in the short term.
And then, owning a social network is no easy business. Social networks have been under fire lately for things like fake news and misinformation, with a Facebook boycott costing Mark Zuckerberg’s service millions of users.
Microsoft is right now the only tech giant that has more or less decided to stay away from social networks in the consumer space, and buying TikTok would throw the company into the same business with rivals like Facebook, Twitter, and others, making it prone to the criticism that I mentioned above.
Whether or not Microsoft will manage to keep TikTok the Internet phenomenon that it has become under Chinese ownership is something that remains to be seen, but in the long term, the world’s number one software giant is making a risky bet that it just must win.