This is why Microsoft wants to buy TikTok and what Trump has to do with it.
Home >> So why would Microsoft want to buy TikTok, a social media service that is a favorite with American teens?
It may be the long-awaited childhood source of the stodgy software giant.
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But Microsoft strives to break out of its Windows desktop, suit-and-tie, 9-5 image to capture more of the consumer market. In early 2007, it saw potential for social media, invested $ 240 million in Facebook worth $ 15 billion, and even offered to buy Mark Zuckerberg's company outright.
An acquisition of TikTok
would deliver something that has eluded the software giant for years: an important platform to rival Google and YouTube owned by Google. And it could recreate its image in young people.
TikTok, which is owned by China's ByteDance, is quickly emerging as a powerful competitor of Snapchat, Facebook and Facebook-owned Instagram, says eMarketer analyst Debra Aho Williamson.
"Getting TikTok would give it another chance to get in on a fast-growing, youth-oriented social media property and be a way to try to return to Facebook for disdaining its claims," Williamson said in a statement.
Microsoft in talks for TikTok:CEO Satya Nadella talks with President Trump
TikTok ban Trump threatens TikTok to the US ban to
operate Wedbush Securities analyst Daniel Ives agrees
"over the past decade," he saidof?..
a takeover TikTok would be a "crown jewel" that discount was picked up, "an asset with 100 million users, a huge momentum, engagement, advertising revenues and something they could sell them to the broader Microsoft-based," said Ives.
Microsoft also wants Your data
Perhaps the greatest prize of all, large amounts of data about TikTok users,
which can be used by Microsoft to build software and hardware projects, not just Xbox. For the first time, it would have an in-depth understanding of consumer behavior and could put a real hook on young people taking lessons on Chromebooks and other Google products in classrooms and scrolling through Snapchat and Facebook-owned Instagram in their spare time.
Protecting that data is Microsoft's biggest selling point to the Trump administration, who are concerned about TikTok's ties to the Chinese government.
TikTok, which is currently owned by a Chinese company, has been scrutinized and investigated in the US on charges of providing user data to Beijing, a charge denied by company officials.
"Microsoft would ensure that all private information of US users of TikTok is transferred to and remains in the United States," Microsoft said.
President Donald Trump's
threat to issue an executive order to ban TikTok in the U.S. follows another last year thatdue to concerns over national security effectively banned Chinese telecom giant Huawei.
Not only does TikTok pose a risk of data privacy, Chinese oversight, "it also poses a direct challenge to the technological dominance of the US," said Michael Priem, founder and CEO of Modern Impact, an advertising technology company Minneapolis. "TikTok has become the fastest growing social market platform in history and its emergence as a Chinese technology threatens US reputation," he said. "The US that uses sanctions to interfere with its use is unprecedented. "
What kind of data are we talking about? Your location, times when you're in the app, when you're using certain genres or content, says Shelly Palmer, CEO of The Palmer Group, a tech strategy advisory group.
"By your behavior (known as behavioral data), you 'learn' the algorithm exactly what you like, what you hate, what you ignore," Palmer said.
captivates "The sheer amount of data collected from your behavior on TikTok allows Bytedance to predict with amazing accuracy what you will or will not do," said Palmer. "This is an unprecedented possibility."
Although the data is not personally identifiable "The concern is that China will or would violate these data standards that are regulated here in the US and in Europe and many parts of the world," Awl said.
The other advantage for Microsoft?
Potential ad dollars. TikTok is said to increase Microsoft's share of the US digital display ad market. This year, eMarketer predicts Microsoft to retain only 1.5% of the market, slightly ahead of Snapchat, but well behind Facebook's 42% and Google's 10.4%.
"From an advertising company point of view, the value of TikTok for Microsoft can be potentially very high, but I want to emphasize that it's currently just potential," said Williamson of eMarketer. "TikTok is very early in the development of its advertising business and there is no guarantee that it will attract much of the ad dollars."
What it does have: A wide cross-section of marketers and creative ad formats, Williamson said. "But to build a sustainable advertising company, TikTok must develop simple self-service tools marketers advertising buy in bulk using automated purchasing tools. Microsoft can help, although not very well known for its advertising technology."
What is popular TikTok?
According to the Cowen Washington Research Group, TikTok is a "potential disruptor" in social media and video. In the second quarter, TikTok had 14% penetration of US respondents aged 18 years and older in a survey of 2,500 US consumers. probably low because of how young the platform is skewed and Cowen doesn't question consumers under the age of 18. Among the respondents aged 18 to 24, TikTok's popularity is even greater, at around 42%, versus 65% for Facebook, 78% for Instagram and 63% for Snapchat,
TikTok is the youngest leaning of social media networks, says Andrew Selepak, a professor sor at the University of Florida and director of the graduate program specializing in social media. Initially, it mainly attracted 13 to 17-year-olds. "Then the coronavirus pandemic broke out and older people said, 'I think I'll try TikTok' and now you have users over 18 suddenly using it," Selepak said.
The prospect of being banned from TikTok is a nightmare scenario for many tweens and teens living off the service, Ives said. If Microsoft saves TikTok, it will hold many grateful youth, Ives said.
"The perception that Microsoft is your grandfather's technology company, from a consumer perspective and not a business, would change overnight," he said.
TikTok users already share Microsoft's love for potentially preventing TikTok from being banned.
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Will Trump ban TikTok?
Trump said on Monday that he will wait until September 15 to take action on TikTok, giving Microsoft or another company the time and opportunity to purchase it.
Without going into detail, the president essentially claimed that the U.S. should get a discount to allow the deal.
"A very substantial portion of that price will have to go into the Treasury of the United States because we will allow this deal to go through," Trump said.
At the end of last week, Trump threatened to "banish" the company in the United States, but his position weakened over the weekend.
On Sunday evening, Microsoft took the unusual step of publicly acknowledging acquisition talks before a deal was reached. In a blog post, Microsoft said it will "quickly continue to continue discussions with TikTok's parent company, ByteDance," with a final decision expected by September 15.
"I set a date around September 15, after which it will go bankrupt," unless Trump surrenders Chinese property, Trump told reporters on Monday. "But if someone ... buys it, it will be interesting."
TikTok made a statement in response.
"TikTok is loved by 100 million Americans
because it is a home for entertainment, self-expression and connection. We are motivated by their passion and creativity, and committed to continuing to bring joy to families and meaningful careers to those who create on our platform as we build TikTok for the long haul, "said the company." TikTok will be around for many years to come .
"aconcern for the White House: a ban on TikTok would not be popular with young Americans But not everyone in his administration is prepared to go along with a saleHouse..
in an interview with CNN accused Peter Navarro, trade adviser to the White , which opposed the sale, allowed Microsoft to allow the Chinese government to monitor and monitor censorship through its search engine Bing and communications app
Skype.TikTok users gained a sort of anti-Trump reputation when they turned to thousands in June registered tickets but did not show up to embarrass the President at his campaign meeting in Tulsa, Oklahoma, but many top users of the app are conservati ef.
The deal, if it goes through, would be part of the political debate during the election "with Trump able to say," Look, I stood up to China and threatened them and now this is a US company for US users, " Selepak said. "This has important political aspects."
What are the chances of Microsoft buying TikTok?
Ives conservatively estimates it to be "75% to 80%".
That's because ByteDance needs a deal. The company, a huge social media player in China, is estimated to be about $ 100 billion, half of which is thanks to TikTok. "Their backs are against the wall, because when TikTok shuts down in the US, valuation drops by 50%," said Ives.
And Microsoft is in a good position because no other major technology company - Amazon, Apple Alphabet, Facebook - can play a play because "they have come to the ears of regulatory oversight," Ives said.
"They can't even smell TikTok. The only one who ticks all the boxes and gets a green light from the White House is Microsoft, "said Ives.
The deal could be particularly beneficial to Microsoft because the TikTok business in the US is valued in the $ 40 billion range, but could eventually reach $ 200 billion if it takes the right steps. And Microsoft may get TikTok promotion in other international regions as part of the deal, Ives says.
But nothing is set in stone. TikTok leaves the door open for negotiations with other potential buyers.
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