Microsoft once again finds itself in the midst of a high-stakes deal making, as discussions regarding the probable sale of it to the extremely popular short-video platform TikTok heat up. This interest has been revived by comments only recently from the former U.S. President, driving a competitive bidding process forward for majority control of this impactful social media asset.
This isn’t the first time TikTok purchase won’t be Microsoft’s first try. During the summer of 2020, in the early days of the COVID-19 pandemic, Microsoft pursued an acquisition that would have given the Seattle-based tech company control over the short-form video service. Those talks ultimately went sideways, with Microsoft CEO Satya Nadella later characterizing the experience as “the strangest thing I’ve ever worked on.”
This brings us to the present, where, in 2024, Microsoft sits at the negotiating table once again. Competition this time is likely from Oracle and Elon Musk among others. The company has since signaled a competitive auction in public statements for maximum value for any potential divestment.
It’s just plain undeniable: TikTok is an absolute worldwide powerhouse. At the time of penning this post, it had laid claim to more than 150 million monthly active users in the U.S., going even higher into more than a billion globally, hence revolutionizing people’s method of consumption when it comes to online content. People claim that reason as the major ingredient which turns on that powerful, sophisticated recommendation algorithm.
The platform, with its impact on popular culture, politics, and global trends, makes for a strongly strategic asset. To Microsoft, TikTok would not only be a major addition to its social media stable, supplementing the ownership of LinkedIn, but also come with an opportunity to embed the powerful AI technology driving TikTok into a wide array of its other products and services.
The scrutiny by the U.S. government over TikTok has been a major factor in these ongoing negotiations. ByteDance, which owns TikTok, has been increasingly pressured to divest its U.S. operations over data privacy and national security concerns because of its Chinese ownership.
In the previous administration, executive orders were issued about TikTok. While these are in litigation, they illustrate the bargaining power of the brand and raise the stakes for any buyer.
The American operations of TikTok are believed to be valued at tens of billions of dollars-a massive investment even for companies the size of Microsoft. If a deal were to materialize, it would probably rank as one of the largest acquisitions in the history of the tech industry.
The stakes are high for the potential benefits it could bring to Microsoft. Integrating TikTok would complete its presence in the consumer tech space, continuing its business diversification, adding younger and highly engaged users into its ecosystem. Yet, the reported valuation of a high DbContext also underlines how competitive and risky the pursuit is.
Other bidders continue to muddle the landscape of acquisition prospects. Oracle, which also vied for TikTok in 2020, is still interested. Elon Musk has been among those mentioned as weighing a bid.
If Microsoft ultimately prevails, the acquisition could dramatically reshape the direction of the company. It would slingshot Microsoft into a powerhouse in social media, planting it squarely in a market now dominated by Meta and a host of other competitors. It could also allow the integration of TikTok’s algorithm into Microsoft’s larger AI and cloud computing strategies.
The result of these negotiations has larger ramifications for the operations of U.S. tech companies in the global market. It underlines an increasingly interlocking nature of technology, national security, and geopolitics, probably setting a precedent for future acquisitions and their regulation.
