What you need to know
- Microsoft evolved from a potential minority stakeholder of TikTok to potentially purchasing all of TikTok.
- The saga has become a "soap opera," according to a report by the New York Times.
- Any potential deal involving TikTok will be greatly affected by the Trump administration.
Microsoft's pursuit of TikTok has evolved from a potential small investment to a potentially massive deal that could greatly alter Microsoft's advertisement strategy. According to a report by the New York Times, the potential deal to purchase TikTok has turned into a "soap opera" involving government rulings and several complex factors. The piece from the New York Times gives a rundown of the entire saga of Microsoft's potential deal for TikTok.
According to four people familiar with the situation that spoke with the New York Times, Microsoft initially discussed purchasing a small stake in TikTok as a minority investor. This move would have potentially led to TikTok migrating over to Azure as a cloud computing service, according to a source that spoke with the New York Times.
ByteDance and TikTok would have potentially benefited greatly from Microsoft becoming a minority stakeholder since it would help the business with its reputation outside of China. The New York Times states that a Microsoft investment "would also provide TikTok with the endorsement of a blue-chip American company to mollify the Trump administration, which had called TikTok's Chinese ties a national security threat."
While a deal might have been provident for both companies, tensions arose that affected any potential deals. Relatively early on in discussions, President Trump ordered that TikTok's operations be sold or that the company cease operating in the United States. This led to a variety of potential sale scenarios being discussed, ranging from just TikTok's North American operations being sold to all of TikTok being sold apart from ByteDance's Douyin app, which only operates in China.
Throughout the entire saga, Microsoft has stood out as a potential purchaser of TikTok. Its unique combination of cash assets and its strong reputation with the United States government make it stand out from other potential buyers. From The New York Times:
The firms needed a major U.S. tech partner to get the deal done, the people close to the talks said. Mr. Zhang and the investors figured that Facebook, Google and Amazon were under too much antitrust scrutiny. But Microsoft, with its cash hoard of $137 billion, cloud expertise and strong government relationships, could work.
If Microsoft did manage to acquire TikTok, the deal could greatly broaden the company's set of data. "While Microsoft has lots of data about industries like gaming and workplace software, it has little information about people's social media behavior," the report says. "TikTok's user interaction information could strengthen Microsoft's data science operation, the people briefed on the talks said."
A purchase of TikTok buy Microsoft could also make a positive impact on Microsoft's $7 billion advertising business, the report notes.
Now, any potential deal involving Microsoft and TikTok will be greatly affected by Trump administration. On August 2, Microsoft issued a statement regarding its pursuit of TikTok. But a few days later, President Trump signed an executive order that will block TikTok in the United State s if it is not sold by mid-September.
Since then, TikTok has sued the United States government, and other potential purchasers have emerged, including cloud giant Oracle.
