Microsoft faces competition in TikTok deal — Twitter

Time is ticking on the 45-day window for a TikTok buyout, and nothing's certain yet.
10 August 2020

There’s a new contender in the running for TikTok. Source: Shutterstock

  • Video-sharing platform TikTok faces an impending buyout from a US company or a nation-wide ban
  • Microsoft and Twitter have shared interest in the acquisition of ByteDance’s TikTok 

TikTok has been under the spotlight as it faces a potential nation-wide ban in the US. President Donald Trump cited September 15 as the day for the video platform sensation to cease operation in the US or escape its fate if a US company acquires it.

Last Friday, Trump ordered US firms to stop doing business with the Chinese app within 45 days — a move that “shocked” TikTok and saw it threaten to sue the government. The Trump administration claims that the Chinese government has access to user information gathered by TikTok, which the firm has consistently denied.

So far, tech titan Microsoft has proposed to acquire the video-sharing platform. The tech corporation also promises to add more security, privacy, and digital safety protection to the popular app.

Trump said last week he would support Microsoft’s efforts to buy TikTok’s US operations if the government got a “substantial portion” of the proceeds.

Acquiring TikTok would be an unusual move for a tech firm focused on cloud services and enterprise software, but it could give Microsoft a channel enabling it to have a shot at becoming a player in the still lucrative and growing digital advertising space — taking on the likes of Facebook and Google.

While the tech corporation owns Linkedin, a business networking platform, its audience base is limited to job seekers, graduates, and groups seeking to expand professional connections. TikTok, on the other hand, is flooded with dancing teens, and it’s a golden ticket to the upcoming generation of Millennials, Gen Zs, and Alpha Gen.

Microsoft recently shut down Mixer, an e-gaming live streaming platform that is set to compete against Amazon’s Twitch and appeal to a more youth-centric community. Mixer’s failure to scale and broaden its reach led to Microsoft forming a partnership with Facebook Gaming, where it migrated users.

An uncertain deal

While Microsoft is the current front-runner in a bid for Twitter, the deal is far from materializing as the creators would prefer the app to operate as a separate entity, reports SCMP.

Carving out parts of the video-sharing app from Chinese owner Bytedance would also be a technically-complex endeavor that would test the patience of President Trump. According to Reuters, a “clean break” from its parent company could take more than a year, far exceeding expectations, as Microsoft reviews and revises code shared with Douyin, Bytedance’s equivalent of TikTok for a Chinese audience.

It doesn’t look like Bill Gates is too won-over by the idea, either. In an interview with WIRED, Microsoft co-founder Bill Gates described the company’s bid to re-enter the social media space as a “poisoned chalice.”

“Being big in the social media business is no simple game […],” he said.

Microsoft may be at the forefront of the TikTok buyout but, as a shadow of uncertainty hangs over the deal, a new suitor has come a-knocking. Social media giant Twitter is reported to have held preliminary talks around a merger with TikTok.

Twitter has had a previous attempt at the short-form video game with Vine but pulled the plug in 2016. Vine was an early pioneer of short-form video content and it continued to popularize the format until Snapchat and Instagram later adopted it. In 2012, Twitter purchased the startup in a US$30 million deal six months before it even launched — however, the social media company soon axed Vine as part of the company’s restructuring.

Around the same time Vine was axed, TikTok debuted and rose to stardom as we know today. It’s hard to say where Twitter’s motive lies in the current deal, but if the social media company was able to acquire and bet on the rising trend of a short-form video app, this could be the second chance the company needs.

It’s no coincidence that Microsoft’s deep financial pocket places the company at the forefront of the TikTok deal, and there may be more rivals for the deal that has yet to emerge. Would the TikTok deal boil down to who can afford to hand in cash within the 45-day window?

CNBC described TikTok as “a jewel asset that a buyer might be able to get to a bargain price,” and nominated Netflix as a viable suitor.

The US streaming giant mentioned TikTok for the first time in a shareholder’s open letter accompanying an earnings report last month. The letter seemed to refer to TikTok as a competitor that should be taken seriously and was perhaps of interest: “TikTok’s growth is shocking, which reflects the liquidity of Internet entertainment.”