Microsoft Confirms Its Interest In Buying TikTok

Posted on August 2, 2020 by Brad Sams in Microsoft with 58 Comments

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.

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Comments (58)

58 responses to “Microsoft Confirms Its Interest In Buying TikTok”

  1. JH_Radio

    Then TikTok can come back just like Nokia did.

  2. marshalltm

    Microsoft’s triumphant return to the consumer space “TikTok for Life”

    I have no understanding of how LinkedIn makes money for microsoft (perhaps this is a column Brad could write) So I certainly don’t understand this.

    That said, incorporating the backend graph stuff, it could use to Skype technology to be a robust messaging and video conferencing services. Using the right brand and content development in TikTok to have a competitor to WhatsApp/Zoom/Facebook Messenger/Snapchat. It could federate with Skype and Teams making it a very large user base. How any of that make money is beyond me.

  3. north of 49th

    Some part of me wonders if there is any machine learning exercise Microsoft may get out of this much like Google with Google photos. One of the toughest parts of machine learning is getting a sufficiently large and diverse enough dataset to train with.

  4. dallasnorth40

    This is brilliant! I may even reinstall the app now.

  5. beckoningeagle

    All kidding aside, I do feel more comfortable with our Youths' information being stored by Microsoft. Especially after reading the Zucked book by Roger McNamee and the Facebook experiment gone awry:

    People make light of these applications, but there are real consequences to globalization that need to be taken into account.

  6. red.radar

    I have to wonder why.... Tik Tok just seems like the fad of the moment and will quickly erode in popularity once mom and dad get on the service.

    I also have to wonder how the cultures of linked in and tik tok will mesh ...

  7. overseer

    My guess is they want to get the user community so they have a large pool of people with very short attention spans they can recruit from for their product development and support teams.

  8. ponsaelius

    Microsoft will step up to the plate and create three skus.

    TikTok Free

    TikTok 365 Personal

    TikTok Enterprise E5

  9. bats

    First of all, I like this idea. Tik Tok is a fun/funny app. However, the problem is very much like Huawei, ...... that Chinese government. If people don't understand how dangerous the Chinese Gov't is, then you need to go youtube and research it. Reading other people's blog (especially techbloggers) is way under informing yourself.

    But what is Microsoft going to do with TikTok? Why did Microsoft buy Minecraft, as opposed to building a comparable game of their own? Their is clearly technology in that app that Microsoft can develop and implement it's own (i.e. AI). Why should Facebook and Snapchat have all the good stuff?

  10. jeff.bane

    We all thought Minecraft made no sense too.

  11. Daekar

    I am struggling to see the synergy for Ms with this purchase. Perhaps I should expect to have problems since I am double the age of TikTok's target audience...

  12. jwpear

    Hmm, given Microsoft's gift for naming, what will they call it? Microsoft Windows Azure TikTok Personal?

  13. dbonds

    Definitely agree that they'd be buying the "user base" and another chance with the consumer (especially the younger generations) if they can pull it off.

    Having said that, the real reason of my post is to thank everyone here in the comments for the comedy gold of the various naming/branding predictions on how MSFT will mangle this if they actually acquire TikTok. :-)

  14. omen_20

    I argued some years ago that Microsoft should have bought Snapchat, and merged Bitmoji and Avatars. I noticed young teenagers hung out on Xbox when at home, and while out they lived on Snapchat. Merging the messaging systems would have been a big win, and integrating IP in the AR features would have been popular. That said, Microsoft never figured out how to merge Skype with Xbox messaging, so it would have probably been a failure.

    Will be interesting to see how they do with Tiktok.

  15. jfgordon

    Just imagine using 1/1000 of those 20-30bn to make icons, context menus, toolbars, and window frames look consistent in the OS! If only.

  16. waethorn

    It took them 9 months to kill Mixer after signing on their last exclusivity partnership with a Twitch streamer, and only 42 days to kill Kin. Can they break their previous records?

  17. sevenacids

    This is actually a weird move in the economic war of the US. What's in it for Microsoft? Cannot be anything else but an expected user data gold mine. But is it really worth the price? I mean, latest news is that Trump/the US financial office wants a big piece of the cake when it comes to the purchase price.

  18. ebraiter

    Surprised the UK wasn't included ["Five Eyes" reference].

    $30 billion to buy a portion of TikTok. Seriously?

  19. hellcatm

    They have the money to do it and its a chance. If you throw enough pasta at a wall something is going to stick. If they have the cash, why speculate, if it fails it fails, but they may see something we don't and it may work.

    With Mixer, I don't think it was MacroSoft's fault. Actually, I think they dumped it too soon. The Kin was Verizon's fault, they priced it to high, but people who had them generally liked them. I think the thing that will happen is the two parts (the Chinese Tic Tok and US version) will be handled as to different companies (maybe even a name change?). I don't know if this can be put into VR or AR somehow? I'm just speculating. We'll just have to see what they do with it.

  20. dcdevito

    Ad Revenue + Cheap Price (since the other big tech giants can’t touch it) = too hard to pass up. Now they need to buy SnapChat and live stream in Teams. I kid but the options are endless if they want it. Let’s see what the do.

  21. BrianEricFord

    I’m frankly a little baffled that Paul hasn’t put out something fairly lengthy about this. The whole deal stinks to high heaven, and on we get ... Brad Sams ... with a fairly blasé take on a news story that straddles Tech, U.S. Politics, Geopolitics, National Security, and also, quite frankly, legal issues. Not to mention the dignity of Microsoft as a company. (Can we still attribute dignity to Nadella after that blog post?)

    I keep checking here expecting a “premium” badge on a deep think but ... nope.

    • Paul Thurrott

      I took the last several days off, for starters. But ...
  22. skolvikings

    This is good news. So many people are addicted to Tik Tok, that when Microsoft buys and ruins the service, it will free many from their addiction. :)

  23. mattbg

    The more I think about this and read Microsoft's statements about it, the more I wonder if it's just a ruse to get a visible, high-volume consumer service onto Azure.

    These are some areas of interest:

    1. Migrate TikTok to Azure and then sell it on to another party or otherwise be completely hands off. Maybe they are just seen as a capable (financially, legally, and otherwise) custodian to deal with the TikTok problem in the short term.
    2. Use it as part of LinkedIn's jobs/recruitment angle, for the next generation, which is perhaps the most important aspect of LinkedIn.
    3. XBox tie-ins?
    4. TikTok's AI, which seems to be well-regarded.

    I don't see how Microsoft sustains the focus needed to rapidly innovate on a social media platform otherwise, but maybe they don't want to.

    "TikTok runs on Azure" might be seen as a bold statement. We know Netflix runs on AWS. I'm not sure Azure has anything comparable in popular mindshare.

  24. brettscoast

    Thanks for the post Brad. It's hard to see how this makes sense for Microsoft to do a deal (very risky) especially the shuddering price at above $30B where is the value for them long term?

  25. harrymyhre

    One of the all time weirdest moves

  26. martinusv2

    I do not see why Microsoft should get TikTok.

  27. miamimauler

    I just don't get this at all, it goes against everything Nadella has done since becoming CEO.

  28. SRLRacing

    I don't think this is so much of an acquisition as it is an investment in the vein of Microsoft's investments in the likes of Apple and Facebook. The reason I think that is how they are open to other investors coming in tells me they don't plan to integrate TikTok into their business in the same way LinkedIn has been. Most outside investors would want to have some sort of exit strategy which is usually either an acquisition or taking the company public. In TikTok's case it would probably be the latter.

    Here's the playbook as I see it: Once the deal closes you migrate all back end services to Azure and go through the code front to back to ensure everything is kosher. While you are in there you might as well have them throw in some Xbox and Microsoft services integration. This will have been part of the deal with Byte Dance to get this integration worldwide. You clean up the books and make sure you have compliant accounting practices in place for a public offering. Then you spin the whole thing out as an independent public company. Or you back it in to/ merge it with a publicly traded company with excellent synergies **COUGH**Twitter**COUGH**. You hopefully make a quick and tidy profit on the transaction itself and have built yourself a strategic partner who will hopefully grow for many years to come.

    But that's just me and I am no Amy Hood.

    • IanYates82

      In reply to SRLRacing:

      This isn't crazy - you may be on to something. The Facebook investment is often forgotten by many (the Apple one tends to stand out in memory due to the big Bill Gates face on screen at the Apple conference)

      Spinning it back out to something like Twitter makes sense down the line, or perhaps someone like Snapchat? (I notice it's gone off the boil a bit compared to Instagram, Twitter, etc but probably still has a huge following).

      • SRLRacing

        In reply to IanYates82:

        I proposed it mainly because its exactly what I would do if I had the opportunity and the ability to perform on a multi billion dollar transaction.

        The only way that it would really differ for an investor that isn't Microsoft is that you wouldn't be bothered by who you moved your back end to as long as they gave you the best deal, that is, if you didn't buy the US based data centers as part of the acquisition. As well as you would want to get a "Share to TikTok" button placed on every platform that can generate short form video content not just Xbox and Microsoft services.

        As far as who do you merge it with, the best company to merge with would be a great sharing platform that could use a short form video provider. From there you could take your pick on who best fits that need. I would see the whole process being 3 years max, ideally much shorter maybe a year.

  29. BrianEricFord

    Hard to believe we went from antitrust theater in Congress earlier this week to Microsoft using the President to gobble up a social media network.

  30. harrymyhre

    I told one of my friends in the Phillipines about this and she asked "why?"

  31. will

    Here comes "Microsoft TikTok" with a fluent design that is elegant to use. Soon, you will be able to embed a Microsoft TikTok video into Outlook, or in a Teams chat. Later they will be adding support to reply to comments in Teams with a TikTok video. Not to mention Xbox integration for keeping up with your friends.

  32. maddycom

    Microsoft does not even have a phone service for this. How will they deal with iphone users of this service with microsoft as owner.

  33. GCalais

    Okay, this is hilarious.

  34. John Craig

    This is a fantastic idea. Microsoft buys TikTok and utterly destroys it, and my two teenage daughters stop arsing around making retarded videos all day and start doing something marginally more productive with their lives.

    Cheers, Microsoft :)

  35. scovious

    Its another service play, there will be a subscription eventually for an ad free experience or longer uploads. Video platforms are a smart place to be if they want to grow their cloud.

  36. bart

    Does TikTok own any IP that is interesting to Microsoft, which might be the real reason MS is looking at this company?

    • Paul Thurrott

      Microsoft is buying a user community here, just as it did with LinkedIn, Minecraft, and GitHub.
  37. kingv84

    In reply to JensenGregory:

    lol. It does not matter if you want it to go away, it won't. The younger generation likes it and that is the future for companies. They want to connect with the younger generation who is on TikTok.

  38. madthinus

    It is possible that TikTok is simply an investment. They own and operate it like the current owners. It has a head office in the USA and they could sell it later or IPO it, like they did with Expedia before. They get a positive effect to their brand and advertising scope for Bing.

  39. beckoningeagle

    September 16th, 2020 - Associated Press - "Microsoft announced this morning that it is renaming it's TikTok brand to "The new Active Pass TikTox for Windows UWP 365 Consumer Edition with IntelliSense". There will be two SKU. The free edition and the 365 Business which will be an add-in to current Microsoft 365 Business Standard subscriptions.

    Microsoft announced that in the future it will include it with Microsoft 365 E255 plans without any additional cost. This version will feature Azure Advanced Threat Protection P56 and 6 factor authentication.

    Beginning Sept. 17th 2020 the "The new Active Pass TikTox for Windows UWP 365 Consumer Edition with IntelliSense" will be available in the Google Play Store, Apple App Store and the Windows Store. Not all features will be available in the Windows Edition of the software until at least Summer 2021."

  40. mattijzz

    Microsoft in the consumer space. I dont get it? Tik Tok? How is that connected to business.