In this guest post, Alex Watts (pictured), DDB Sydney Head of Social, discusses his thoughts on the potential Microsoft/Tik Tok acquisition and whether the deal actually makes any sense for Microsoft…
Trump is calling for a ban, China’s calling it a “smash and grab,” but the real question is – does buying TikTok really make sense for Microsoft?
TikTok is a young juggernaut well placed to weather the standard social network growing pains in front of them – namely monetisation and audience scaling. By building a platform of unparalleled creative capacity, they’ve claimed a huge audience and unlocked niche service that other social networks can’t seem to crack – see Facebook’s shuttering of Lasso.
But, like Huawei before them, they’ve become the focus of the China-USA tech-trade war in the past month – and there are “discussions” about Microsoft buying them.
Now, Microsoft has form in buying social networks – they snapped up LinkedIn not that long ago and have had reasonable success pushing that company forward. But Microsoft buying LinkedIn made sense – Microsoft is foundationally a business services company, and LinkedIn is a business platform. You can see how they can use it as part of their overall suite and add value for both parties. When it comes to TikTok, the benefits aren’t as clear.
Microsoft buying TikTok is great because TikTok could become a star-spangled all-American company overnight, and maybe avoid the bans currently under review in the US and Australia. If Bytedance does sell, they’d probably keep creative control, while unlocking significant audience and revenue.
The benefits for Microsoft are less clear, and the risks a bit higher. Microsoft will get all the sweet user data that tech companies love, maybe some youth cred, but will those people transition to Microsoft platforms in other ways? Unlikely. Will TikTok become a subscription service? That hasn’t worked before. Is a Bing integration on the cards? You’d hope not.
From a risk perspective, Microsoft hasn’t built a social network since MSN Messenger – except for so.cl, which I’m sure no one remembers – and that means they could accidentally poison the well in chasing monetisation and audience. Even worse, they could turn it into another Tumblr, a billion-dollar white elephant.
So, Microsoft makes sense for TikTok, but TikTok makes less sense for Microsoft. That said if it means TikTok doesn’t get killed in the USA-China cold war? I’m all for it.
