This whole Microsoft buying TikTok thing strikes me as very strange…I don’t see that it would be successful for anyone involved. The rumoured price tag of $30 – $50 billion means it’s not something you can take a punt on – even with Microsoft’s revenues and profits, that’s not a trifling sum of money!
Xbox aside, Microsoft don’t have a great track record when it comes to consumer products – Skype brand recognition seems to have dropped off massively since MS’s acquisition, Windows Phone (as awesome as it was!) never properly made it, and earlier in 2020, Microsoft shuttered “Mixer” – their game streaming platform – less than 4 years after acquiring it.
While it’s fair to say that Microsoft are now (again) considered a “cool” company, that’s a relative statement…being “cool” to 30+ year old people in tech roles who use LinkedIn is not the same as being “cool” to teenagers!
Any attempts to “Microsoft-ize” the platform would surely be the beginning of the end of TikTok’s success – causing the big users (and thus their millions of followers) to migrate to the next platform (i.e. Triller) and reducing the available data…which may be the focus of the purchase. Even if they let it run as a totally separate entity, I can’t help but wonder if just the fact it’s owned by Microsoft would be enough to put the core users off?!
Distractions
Another problem with this purchase would be the distraction it causes. Microsoft have done a great job under Satya Nadella of becoming a “true” Enterprise company – very focused on business, their customers, their goals, and their roadmap. Bringing TikTok into the organisation will distract pretty much every aspect of Microsoft:
Leadership – potentially opening them up to a whole world of scandals and issues around content, censorship, election interference, cyber-bullying, data breaches and more. Things which surely Microsoft would rather stay clear of?
Staff with new colleagues and new (or unclear) corporate strategy. Will they be side-lined for this new consumer focus? Will this affect their career path or budgets or bonuses etc.?
Customers – what does this mean for Microsoft’s strategy going forward? I’m sure some execs will start to wonder if it’s a good idea to bet their 10-year cloud strategy on the company that owns TikTok – are they the fully committed enterprise partner they want and need? Will they try and merge TikTok with Microsoft 365 and/or Dynamics 365?
I also think it will give so much ammunition to competitors like Amazon, Google, Oracle, Salesforce. They’ll be able to market to customers playing on the change in Microsoft’s direction, their lack of focus on business needs and enterprise customers, and the idea of having TikTok videos within business communications.
While data is massively important these days, and Microsoft will clearly have one eye on the future of tech and the company itself, I’m of the opinion that buying TikTok would be a mistake. Yes, they’d have access to many many millions of consumers…but would Microsoft really be able to make much use of them? I can’t see that direct advertising would work at all so one has to assume it’s more about data mining a la Facebook – I’d suggest that staying away from being tarred with that brush would serve Microsoft well in the long run.
Other options
Walmart have thrown their hat in the ring and are apparently looking to team up with Microsoft to purchase TikTok. This makes more sense than a solo Microsoft bid – US grocery retailers have been some of the leaders when it comes to mining and using consumer data with targeted vouchers/offers etc. This would give them a huge amount of extra data…for a new generation of consumers who, to a large degree, buy different things in different ways for different reasons than the generations before them.
Reports say that Walmart were already working with SoftBank to put a deal together but the US government pushed back due to a lack of cloud technology – hence the move to join with Microsoft.
Alternatively, Oracle are apparently also in the running to acquire TikTok. As much as I can’t really see it fitting into Microsoft, I definitely don’t see it fitting into Oracle. Again, I’m sure it comes down to access to data but I’m also sure that Oracle’s involvement would kill it even faster than Microsoft!
Who will eventually win out is unclear at the minute. The Trump administration has been oddly involved in this whole thing – in fact, they’re the reason it’s even happening – and that may influence the eventual new owner. Oracle have close relations with Trump – Safra Catz was on his transition team back in 2016 while Larry Ellison hosted (but didn’t attend) a fundraiser for Trump earlier in 2020.
Cloudy with a chance of Licensing 