WASHINGTON: A deal allowing Microsoft to buy social media phenomenon TikTok could be transformative for the US tech giant’s efforts to become more consumer-focused - if it can overcome the business and political risks.
Microsoft appeared to be in position to acquire the Chinese-owned app which is under national security review, after President Donald Trump said he would approve such a tie-up if completed by mid-September, report agencies.Buying TikTok could make Microsoft a hipper, more youth-focused company after years of shifting to enterprise services and cloud computing, say analysts.
Microsoft has had limited success in social media, although it did acquire the business-focused network LinkedIn.
Debra Aho Williamson, an eMarketer analyst, said Microsoft has long had ambitions for consumer networks and even sought to acquire Facebook at an early stage.
“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 get back at Facebook for spurning its advances,” she said in a research note.
Williamson said TikTok could help Microsoft boost its position in digital advertising while noting that “it’s just potential at this point. TikTok is very early in the development of its ad business, and there’s no guarantee that it will attract a large share of ad dollars.”
Daniel Ives at Wedbush Securities said TikTok could be a golden opportunity for Microsoft, with the current value appearing to be around US$40 billion but which “could reach a valuation in the US$200 billion area code given the steep user and engagement trajectory of TikTok.”Ives said in a research note that Microsoft “would be making an aggressive bet to transform its consumer strategy with a major social media bet.”
Analyst Jack Gold of J Gold Associates said he was skeptical of a Microsoft-TikTok marriage that would put the US firm in unfamiliar territory.
“Microsoft frankly has never been all that good at running a consumer-focused social network, they’ve tried it before,” Gold said.