If Microsoft buys TikTok, it could be hailed as a ‘hero’ for saving the app as President Trump threatens to ban it. Here’s why analysts say a deal might make sense. (MSFT)

satya nadella

Microsoft is reportedly in talks to buy the US operations of viral video app TikTok, even as President Donald Trump threatens to ban the app over its China ties.
TikTok seems to have little to do with Microsoft’s existing business, which largely focuses on cloud computing and enterprise software.
But, some analysts say, buying TikTok could win Microsoft accolades from the app’s millions of users who are worried about Trump’s threat of a ban: “Microsoft has the opportunity to be the hero here.”
Microsoft could be taking this as an opportunistic move to push back into the consumer market and establish a foothold in mainstream social media.
On the other hand, some analysts say TikTok may just be too strange a fit to make sense for Microsoft.
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Microsoft is in talks with TikTok over a potential acquisition of the viral video app’s US operations, according to multiple reports, as President Donald Trump plans to order TikTok’s China-based parent company, ByteDance, to sell.

Microsoft and TikTok declined to comment on these reports, and it’s still unclear how advanced any talks might be, but the news came as a surprise to many: For all of TikTok’s massive popularity, it has little to do with Microsoft’s existing business – a business that largely focuses on business software, cloud computing, and serving working professionals.

TikTok could be worth more than $30 billion, The Information reported — more than Microsoft’s largest-ever acquisition to date, when it paid $26.2 billion for LinkedIn in 2016.

Analysts who spoke to Business Insider agreed the acquisition seems “out of character” for Microsoft, but said the acquisition could be an opportunistic play for Microsoft to bolster its consumer business and gain favor among younger generations.

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Trump has said that he’s considering banning the app in the United States over its China ties. That has TikTok’s many millions of mostly-younger users worried for the future of their favorite app. If Microsoft swoops in to buy TikTok, says Futurum Research analyst Daniel Newman, it could be hailed as a savior by those users.

“The rising generations are very attached to this platform,” Newman said. “Microsoft has the opportunity to be the hero here.” It could be a “future-proofing” method for Microsoft to win over the next generation of consumers.

Still, it would be a counterintuitive move for Microsoft, which has spent the last several years under CEO Satya Nadella doubling down on cloud computing, even as it unwinds consumer businesses like Groove Music, the Nokia smartphone unit, and most recently, the Mixer video game streaming service.

But analysts argue that acquiring a hot app like TikTok would reinvigorate its appeal to consumers, especially in the realm of social networking.

“It’s a little bit out of left field, but for Microsoft, the one area where they missed the boat was social media,” Wedbush Securities analyst Dan Ives …read more

Source:: Business Insider


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