Report: Microsoft to make major push into social media space

Report: Microsoft to make major push into social media space
Written by:
Jayson Derrick
September 11, 2020
  • Microsoft is reportedly in talks to acquire TikTok.
  • TikTok is owned by China's ByteDance.
  • U.S. President Trump may force TikTok to divest itself from its owner.

Tech giant Microsoft Corporation (NASDAQ: MSFT) is in talks to acquire fast-growing social media app TikTok, a source told The New York Times’ Mike Isa and Ana Swanson.

About TikTok

TikTok is considered the fastest growing social media app but has come under recent scrutiny. The app is owned by ByteDance, a China-based internet company, and was recently banned in India. The Trump administration is considering a similar move amid reports of national security concerns.

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According to NYT, the Whitehouse is concerned data the app collects on users could fall in the hands of the Chinese government. To address these concerns, TikTok named ex-Disney executive Kevin Mayer to be its chief executive.

Microsoft’s interest in TikTok

Microsoft is reportedly in talks to acquire the core TikTok app from its Chinese owners, Isaac told CNBC in an interview. It remains unclear how advanced the talks are between the two sides although it is “pretty clear” TikTok is a motivated seller. 

If reports are accurate, Microsoft or another buyer would need to provide assurances on how it is safeguarding user data, especially from TikTok’s office in Beijing, he said.

Fox Business’ Charles Gasparino similarly Tweeted sources are suggesting Microsoft is in talks to acquire TikTok.

Antitrust and competition concerns

Microsoft’s social media presence is essentially zero and an acquisition could be viewed as a positive step in terms of competitor concerns, Isaac said. TikTok, backed by the financial might of Microsoft, could prove to be a formidable competitor to Facebook that owns multiple social media and chatting apps.

Microsoft could find itself in a bidding war against any other company that wants immediate access to both social media and ad exposure, he said. But it is too early to speculate what other companies are interested in TikTok if any at all aside from Microsoft.

Coincidence timing?

Reports of Microsoft looking to acquire TikTok nearly coinciding with comments from the White House on Friday. Trump is considering a move to force ByteDance to “divest its ownership” of TikTok.

Trump seems to have allies on the other side of the political aisle — certainly a rarity these days. Sen. Chuck Schumer (D., N.Y.) said last year an investigation into TikTok is “welcome news,” The Wall Street Journal reported.

“This new investigation is validation of our concern that apps like TikTok—that store massive amounts of personal data accessible to foreign governments—may pose serious risks to millions of Americans and deserve greater scrutiny,”. Schumer said.

Any final deal would need the seal of approval from the U.S. Treasury-led Committee on Foreign Investment.