A Final Look Back on Microsoft and TikTok (Premium)

With the TikTok soap opera finally behind us, I’d like to provide another view on Microsoft’s disastrous attempt to ally with the U.S. government and wrest control of a Chinese-owned company away from its corporate parents.

As I wrote in Damned if You Do (Premium), Microsoft’s oversight of TikTok’s non-Chinese business operations would have been problematic and could very likely have ended in failure. The software giant has no particular expertise with consumer services, and it continuing to run TikTok as an independent firm would have delivered the same lackluster results as does LinkedIn today, albeit at double the acquisition costs.

But the bigger issue, of course, was the moral one: “The problem with Microsoft acquiring TikTok is that simply doing so will promote the xenophobic policies of the current U.S. administration and will amount to the theft of a huge chunk of a Chinese company by an American tech giant,” I wrote. “This is exactly the kind of behavior that we, as Americans, are told to expect of the Chinese: That the government will meddle with a supposedly independent corporation … TikTok does not want to be sold, and it does not want to be broken up. It is only considering this outcome to stay in business in the wake of a potential U.S. ban.”

Put simply, my problem with a potential Microsoft acquisition was that the software giant would cede its moral authority after several years as a good corporate citizen under Satya Nadella, a company that values diversity, openness, and fairness.

I still believe that, and that Microsoft’s efforts were a crazy mistake. And yet I’m intrigued by Microsoft’s short statement about it being passed over for the acquisition and what it suggests about its intent.

ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft.

Microsoft was known to have accelerated its bid to, over time, include all of TikTok’s non-Chinese businesses. This tidbit indicates that ByteDance was only willing (under duress) to sell TikTok’s U.S.-based assets because that’s the one country in which it is/was facing a ban. And we now know that winning Oracle bid was both for the U.S. only and for more of a “partnership” than an acquisition. So from ByteDance’s perspective, Microsoft wanted too much.

We are confident our proposal would have been good for TikTok’s users, while protecting national security interests.

The national security implications of TikTok are at least partially conjectural. The United States has charged that ByteDance/TikTok, as a Chinese company, is “answerable to Chinese intelligence agencies,” and that whichever company controls TikTok’s source code would use it to target individual users with partisan political content or censor content that China doesn’t like.

ByteDance and TikTok have both denied that they help the Chinese government, as has every Chinese firm that’s ever been attacked with t...