In recent reports, it is said that Microsoft is in talks of taking over the worldwide sensational phenomenon of a mobile app that we know as TikTok. A successful deal between the two parties would give the software giant Microsoft a social media platform to expand on as well as lessen the US government’s pressure upon the popular app, especially amid talks of imposing a ban in the country.
With reports of security breaches and snooping around users’ devices by TikTok as well as the US-China relations at an all time low, the Trump administration seems to want to crack down on the popular social media site. Potential threats to their national security are also being investigated due to complete Chinese control over the US operations of the app. Accordingly, they’re also considering the option of ordering ByteDance Ltd., the Chinese company behind TikTok to divest their stake in the app’s US operations.
With reports of Microsoft to be exploring options of acquiring TikTok, any transaction may face a number of regulatory challenges due to souring geo-political ties that will need to be overcome as well. After ByteDance took over Musical.ly Inc. in 2017 and merged it with TikTok, it became an instant hit in the US market. As the popularity rose, so did the security concerns of Chinese parties gaining unauthorized access to US citizens’ data. The Committee on Foreign Investments in the US (CFIUS) had begun a review of this takeover in 2019 as this was the first time of such inroads made by a Chinese app.
While Microsoft has never really engaged in social media platforms, this may prove to be a time of expansion especially with the access to thousands and even millions of young users that love the video sharing app. While other details related to the matter remain unknown, it may prove to be a crown jewel for Microsoft due to the influx of the younger user community. Apart from its dabbling in Xbox, there hasn’t been much focus on young users by the software company, so this could prove to be a turning point.
Another factor to keep in mind is that there may be other companies that may come up as being interested in acquiring TikTok too. It remains to be seen how far ahead in talks is TikTok with Microsoft and other suitors.
No matter which party plans to acquire TikTok, it is definitely going to be a costly affair. As per a report by the research firm PitchBook, ByteDance’s valuation recently stood at around a jaw dropping $100 billion. According to another report by Reuters, some of ByteDance’s investors have valued TikTok at about $50 billion, that is about 50 times the sales forecast for this year of $1 billion! An expensive matter indeed.
All in all, as the situation stands currently, such a takeover may possibly be the best solution for all the involved parties. What do you think? Should Microsoft go ahead with the acquisition and should ByteDance Ltd. sell their popular video sharing app avoid getting a country wide ban?