While I keep muttering that 2020 can’t get any stranger, here we are with Microsoft announcing that it is pursuing one of the hottest social media companies, TikTok.
Specifically, Microsoft is looking to buying the app from Byte Dance which owns TikTok after facing political pressure and the possibility of the app being banned in the US. According to the company’s blog post, as long as the government lets Microsoft acquire the asset, they are looking to close the transaction by September 15th. If the transaction is approved, Microsoft would own TikTok in United States, Canada, Australia, and New Zealand; it’s not quite clear yet how the two separate companies of TikTok would continue to operate.
The big question is why Microsoft? It’s a question I have been asking myself a lot recently and here’s some speculation about how it ended up in the company’s hands.
First off, for Facebook or Google to buy the company, this would be heavily scrutinized as both of these companies are under serious anti-competitive regulatory pressures and this acquisition would only further that scrutiny.
Microsoft has found itself on the sidelines of anti-competitive investigations, in the US at least, which means that the company is a better candidate for the purchase. Further, there are few companies in the US that could cough up the $30b+ needed to actually purchase the asset.
But what is Microsoft going to do with TikTok? That’s a good question. Considering the company just killed off Cortana for several consumer-focused apps, and Zune, Windows Phone, and Band have all failed, the company may be looking at TikTok as a way to reconnect with a younger demographic.
Microsoft is likely looking at TikTok through a similar lens of its purchase of LinkedIn. The acquisition of the business-focused social network has been working out well for the company and they are likely looking to replicate that success with TikTok users.
This is a big risk for Microsoft but one that they can afford to take. With their stock price being at a record high and they have steady cashflow, this will open up a new path for reconnecting with consumers.