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Report: Microsoft Talks with TikTok Turned Into “Soap Opera”

Posted August 26, 2020 | Microsoft | Social | TikTok | Windows

According to a report, Microsoft originally only wanted to make an investment in TikTok and not a controversial acquisition. But then things got messy.

The New York Times cites dozens of sources in a report this morning that Microsoft began investment discussions with TikTok and ByteDance, its China-based parent company, in July. The software giant understood the growing tensions between Washington and China, and that managing a social media company would be an endless and thankless task. So it was simply hoping to obtain a small stake in the company with the goal of appeasing U.S. politicians and moving TikTok onto its Azure cloud computing platform.

Then, things went south. The president ordered TikTok to sell its U.S. assets or stop operating in this country. And so ByteDance began to reluctantly discuss selling parts of TikTok with various international firms while pursuing a legal defense of the company. In addition to Microsoft, the companies Netflix, Oracle, and Twitter all expressed interest in parts of TikTok, while tech giants Facebook, Google, and Amazon are under too much antitrust scrutiny to even bother. But Microsoft, with a market valuation of $1.6 trillion, remains the most viable option.

The value of TikTok fluctuates between $20 billion and $50 billion depending on which assets are included, it could be worth as much as $80 billion if Microsoft wins the bidding, the paper claims. Complicating matters, each party is trying to get the best possible deal, naturally, and that could drive up the price as well.

According to the report, Microsoft executives were not interested in a big deal for TikTok, just a minority investment. But as the talks progressed, a potential deal got bigger and bigger, with Microsoft coming to believe that it could also benefit from harvesting TikTok’s social media data and advertising. Eventually, the two firms began discussing Microsoft acquiring all of TikTok’s U.S. assets.

But then the White House intervened, demanding that Microsoft take most of TikTok’s worldwide assets, leaving ByteDance as the minority owner of the rest. Then the unpredictable president simply announced that he would “ban” TikTok with an executive order, in opposition to his own advisors, and incongruously demanded that the U.S. government should benefit financially from any transaction.

Representatives from TikTok and Microsoft were “shocked” by these unstable announcements. But Microsoft publicly pledged to subject the TikTok acquisition “to a complete security review and providing proper economic benefits to the United States, including the United States Treasury,” instantly ceding whatever moral authority it had gained under CEO Satya Nadella.

The report also claims that Oracle emerged recently as a new suitor only because ByteDance wants the best possible deal if it’s forced to sell TikTok, and not just a single bidder. But the arrival of competition for TikTik may actually scare off Microsoft, the publication says.

We can only hope for such an outcome.

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