If Microsoft buys TikTok, it could be hailed as a 'hero' for saving the app as President Trump threatens to ban it. Here's why analysts say a deal might make sense. (MSFT)
Microsoft is reportedly in talks to buy the US operations of viral video app TikTok, even as President Donald Trump threatens to ban the app over its China ties. TikTok seems to have little to do with Microsoft's existing business, which largely focuses on cloud computing and enterprise software. But, some analysts say, buying TikTok could win Microsoft accolades from the app's millions of users who are worried about Trump's threat of a ban: "Microsoft has the opportunity to be the hero here." Microsoft could be taking this as an opportunistic move to push back into the consumer market and establish a foothold in mainstream social media. On the other hand, some analysts say TikTok may just be too strange a fit to make sense for Microsoft. Are you a Microsoft employee? Contact this reporter via encrypted messaging app Signal (+1-425-344-8242) or email (firstname.lastname@example.org). Visit Business Insider's homepage for more stories.
Microsoft is in talks with TikTok over a potential acquisition of the viral video app's US operations, according to multiple reports, as President Donald Trump plans to order TikTok's China-based parent company, ByteDance, to sell. Microsoft and TikTok declined to comment on these reports, and it's still unclear how advanced any talks might be, but the news came as a surprise to many: For all of TikTok's massive popularity, it has little to do with Microsoft's existing business – a business that largely focuses on business software, cloud computing, and serving working professionals. TikTok could be worth more than $30 billion, The Information reported — more than Microsoft's largest-ever acquisition to date, when it paid $26.2 billion for LinkedIn in 2016. Analysts who spoke to Business Insider agreed the acquisition seems "out of character" for Microsoft, but said the acquisition could be an opportunistic play for Microsoft to bolster its consumer business and gain favor among younger generations. Trump has said that he's considering banning the app in the United States over its China ties. That has TikTok's many millions of mostly-younger users worried for the future of their favorite app. If Microsoft swoops in to buy TikTok, says Futurum Research analyst Daniel Newman, it could be hailed as a savior by those users. "The rising generations are very attached to this platform," Newman said. "Microsoft has the opportunity to be the hero here." It could be a "future-proofing" method for Microsoft to win over the next generation of consumers. Still, it would be a counterintuitive move for Microsoft, which has spent the last several years under CEO Satya Nadella doubling down on cloud computing, even as it unwinds consumer businesses like Groove Music, the Nokia smartphone unit, and most recently, the Mixer video game streaming service. But analysts argue that acquiring a hot app like TikTok would reinvigorate its appeal to consumers, especially in the realm of social networking. "It's a little bit out of left field, but for Microsoft, the one area where they missed the boat was social media," Wedbush Securities analyst Dan Ives said. "The enterprise business continues to be the crown jewel, but on the they need to go back to the whiteboard on consumer strategy over the next five to 10 years." Wedbush Securities analyst Dan Ives says that while Microsoft's $26.2 billion LinkedIn acquisition has been successful, it's also largely focused on professional users. The time could be right for Microsoft to try its hand at more consumer-focused social media. Acquiring TikTok would be an opportunistic way do to that, Ives said. Growing tensions between the Trump administration and China have presented an opportunity for Microsoft when it comes to TikTok, Ives said. Under normal circumstances, a booming, growing app like TikTok would have little impetus to look for a buyer — but Ives says that TikTok's apparent desire to get out of the way of escalating US-China tensions changes the equation. Furthermore, as Newman points out, Microsoft has proven with LinkedIn that it's willing and able to let its subsidiaries run independently, which is an encouraging sign that it wouldn't get in the way of TikTok's existing success. Still, not everyone is convinced the acquisition would make sense. "I would be surprised [the buyer] ends up being Microsoft," Moor Insights and Strategies principal analyst Patrick Moorhead said. "It doesn't feel to me this is an alignment with Satya's mission and vision of the company, which is business and consumer productivity. It seems out of character." But, Moorhead said, TikTok also doesn't seem to have a lot of options when it comes to Big Tech buyers who could afford to buy it. Google and Facebook, Moorhead said, have too much ownership of advertising dollars and platforms, and are under too much government scrutiny, and a TikTok acquisition would also seem out of character for Amazon. "I get the consumer angle," Creative Strategies' Carolina Milanesi said, pointing to Microsoft's recent efforts to connect consumers to its products. "But social media is just a mess." Not having a social media platform is one of the reasons, Milanesi said, that Microsoft managed to avoid testifying at a congressional antitrust hearing alongside Facebook, Apple, Amazon, and Google. Antitrust experts said Microsoft was absent likely because the company is focused mostly on business customers, helping it fly under the radar when it comes to the scrutiny that's followed its competitors for the past several years. Got a tip? Contact this reporter via email at email@example.com, message her on Twitter @ashannstew, or send her a secure message through Signal at 425-344-8242.Join the conversation about this story » NOW WATCH: Why electric planes haven't taken off yet
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TikTok owner ByteDance rejected Microsoft's bid for the app's US operations, Oracle reportedly chosen as US 'technology partner'
Summary List Placement The Chinese owner of TikTok rejected Microsoft's offer to buy US operations for...Summary List Placement The Chinese owner of TikTok rejected Microsoft's offer to buy US operations for the popular video app, according to a statement from Microsoft released on Sunday. The move left Oracle as the sole publicly known contender to purchase the American operations of TikTok. "ByteDance let us know today they would not be selling TikTok's US operations to Microsoft," Microsoft wrote in the statement. "We are confident our proposal would have been good for TikTok's users, while protecting national security interests." "To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation, and we made these principles clear in our August statement," the company continued in the announcement. "We look forward to seeing how the service evolves in these important areas." It is unclear as to why Microsoft's bid was rejected. A representative from ByteDance did not immediately return Business Insider's request for comment. President Donald Trump and a group of ByteDance's US investors have shown support for Oracle acquiring the US operations of TikTok, as the company has close ties with the Trump administration. Sources involved in the acquisition talks told The New York Times that ByteDance has named Oracle as its "technology partner," though the company's bid has not been publicly accepted by the Chinese internet company. The Journal and The Washington Post reported Sunday that Oracle was chosen in the deal for TikTok's American operations and will be named the app's "trusted tech partner" in the US, according to The Journal report. President Donald Trump first set a deadline for the acquisition of TikTok's US operations for September 15, but since then, the president has issued two executive orders that have appeared to extend the deadline, first to September 20, then to mid-November. The Wall Street Journal reported last Wednesday that ByteDance is in talks with the US government regarding "possible arrangements" that would avoid a "full sale" of TikTok's operations in the US following months of speculation about which American company would take over the app's American operations. Paige Leskin contributed to this report.SEE ALSO: TikTok may be trying to negotiate its way out of being sold at all Join the conversation about this story » NOW WATCH: What it takes to become a backup dancer for Beyoncé
A TikTok executive said the company has faced more criticism than older tech firms because there's 'a lot of skepticism of platforms' now
Summary List Placement TikTok's fate continues to hang in the balance as its China-based parent...Summary List Placement TikTok's fate continues to hang in the balance as its China-based parent company remains under pressure to divest its US business. Multiple factors have long been at play in the TikTok-US-China debacle, such as the question of how accessible American data is to the Chinese government. But TikTok's vice president Michael Beckerman, who oversees US public policy for the company, said during a Wednesday press call that another reason for the criticism could be because of the ever-increasing distrust of big tech, according to an Axios report. "We didn't have the opportunity to grow up in the golden years of the internet, when tech companies could do no wrong," Beckerman said Wednesday according to Axios. "We grew up in the techlash age, where there's a lot of skepticism of platforms, how they moderate content and how their algorithms work." Beckerman was referring to the shift in perception of the tech industry that has occurred in recent years, which has been dubbed the "techlash." The public has stopped looking at Silicon Valley through rose-colored glasses as the potential dangers of technology have entered the arena, like user data privacy, election interference, and censorship practices. Now, many are calling for the powerful industry to be regulated. Beckerman also said the two-year-old firm is "operating with the expectations of a 10-year-old company," according to Axios. TikTok entered the US market in 2018, the same year that Facebook's mishandling of user data in the Cambridge Analytica scandal came to light. TikTok executives on the Wednesday call said they were pulling back the curtain on TikTok's algorithm, which powers the ultra-popular video sharing app and is somewhat of the secret sauce to a would-be acquisition. China recently tweaked its export rules to include certain types of technology, including artificial intelligence, which could strip a deal of TikTok's coveted algorithm. President Trump set a Sept. 15 deadline for Bytedance, the China-based parent company, to divest its US TikTok business before it would be banned nationwide. If a US firm acquired TikTok, it could skirt the president's US ban on the app. It would also ease the US government's concerns surrounding national security. But the possibility of any such deal remains unclear. Officials were reportedly mulling over the decision to extend the deadline for an acquisition past Sept. 15. President Trump refuted that move and told reporters on Thursday that an extension would not be happening.SEE ALSO: TikTok may be trying to negotiate its way out of being sold at all Join the conversation about this story » NOW WATCH: July 15 is Tax Day — here's what it's like to do your own taxes for the very first time
Jury is out on whether video-sharing site could make Microsoft a social media giantAs the clock...Jury is out on whether video-sharing site could make Microsoft a social media giantAs the clock ticks on Microsoft’s fast-track talks to buy TikTok the jury is out on whether it marks a unique opportunity to become a global social media giant overnight, or a $50bn (£38bn) geopolitically fuelled business blunder.Donald Trump’s trade war with China has forced ByteDance, the privately owned Beijing-based parent of the video-sharing site TikTok, to pursue a sale of its US business after the president signed an executive order last week that could shut it down on 15 September. Continue reading...