At first glance, Microsoft’s acquisition of TikTok seems unusual, according to the news on the evening of August 3rd, Beijing time. Microsoft has spent years hovering over the consumer business, such as Groove Music, Kinect Xbox, Microsoft Band Fitness, Windows Phone and, most recently, the Mixer streaming service.
At the same time, Microsoft has always preferred enterprise software and business, and even smart voice Cortana is moving closer to productivity. So, a service to cater to young people who like to sing and dance, how will fit microsoft’s corporate user base?
Be calm. As we take a closer look at Microsoft’s future ambitions, you’ll find that acquiring TikTok’s businesses in the U.S., Canada, Australia and New Zealand will help grow most of Microsoft’s existing businesses, while also making Microsoft a real competitor to YouTube and Facebook.
Data, data, or data.
The key to the TikTok deal is the data and users available to Microsoft. Part of the Trump administration’s response to TikTok is data security. Microsoft also mentioned the importance of the data in its blog post confirming the deal, saying that “Microsoft will ensure that all personal data of TikTok U.S. users is transferred to the U.S. and stored in the U.S.”
Microsoft can use this data in a number of ways. Microsoft has been using Xbox Live data to support the company’s future hardware and software projects, and using the data could help game developers and Microsoft better understand the habits of people using Xbox. Understanding people’s interactions and usage habits with Xbox’s Kinect attachments could ultimately help Microsoft develop and improve Hololens.
TikTok can certainly help Microsoft clear the blind spot and even affect the way other software and services are developed within the company. Microsoft has enough data to understand how corporate users use the software, but in recent years, microsoft has suffered repeated setbacks in its user-only services, leading to a lack of understanding of consumer behavior.
This is especially urgent, given that the learning life of a large number of young Americans is full of devices such as Android, iOS and Chromebook. Coupled with Gmail dominating the consumer email market, file sharing and Google Docs, these young Americans may not need Microsoft’s software or services in their lives. Microsoft has missed a mobile revolution and has been catching up ever since, and this time it doesn’t want to miss the next generation of workers.
TikTok provides Microsoft with a direct access to millions of young people who use TikTok to watch videos and even create content on TikTok. Microsoft has tried to make its Windows operating system more user-friendly and user-friendly, but TikTok allows these young people to make and publish videos directly from their phones.
Microsoft could use this advantage to advertise Surface, Xbox and other products directly to TikTok users, and could even serve as another basis for the company’s game streaming ambitions. Google already plans to use YouTube to integrate its Stadia streaming service; Microsoft also tried to use Mixer to promote Xbox game streaming, but it didn’t work, and Microsoft later had to work with Facebook for xCloud. In the future, it’s not hard to imagine that when you see a call-and-see video of call-and-see games on TikTok, you can play the game directly, because the game can be delivered directly to your phone in real time via Microsoft’s xCloud service.
Microsoft certainly wants its artificial intelligence (AI) to be limited to the workplace. Although the company’s initial attempt to launch AnI-driven chatbots for consumers failed, Microsoft does need enough consumer groups to test AI outcomes outside the Office family. TikTok has added AI-driven facial recognition to the app’s popular filters, as well as the use of AI technology in the recommendation engine. TikTok’s AI push determines exactly what you see in your app, and algorithms encourage more people to use TikTok.
TikTok has also been exploring augmented reality (AR), which uses AR for its filters. Microsoft’s AR project is largely limited to HoloLens hardware, Windows Mixed Reality headsets, and some attempts to borrow Minecraft on the mobile side of the game. TikTok will open another door for Microsoft to reach the AR mobile world.
Microsoft gave no clues as to how the acquisition would directly affect TikTok’s capabilities, but said only that it would “develop research and development based on the experience that TikTok users currently enjoy.” How Microsoft continues to operate TikTok’s businesses in the US, Canada, Australia and New Zealand remains a mystery. Perhaps there will be two versions of TikTok in the future, one in Asia and Europe, and the other for Microsoft TikTok in the US, Canada, Australia and New Zealand. The functionality of the two versions may be different.
The way Microsoft operates TikTok in the U.S. and elsewhere will be critical to the company’s future success if Microsoft can really take control of its operations. The first big acquisitions by Satya Nadela, Microsoft’s chief executive, include Mojang, the developer of Minecraft. The acquisition has been a success, especially since Minecraft’s game continues to grow after the acquisition, and Microsoft is willing to give Mojang the freedom to continue developing the game independently.
Similarly, Nadella’s $26.2 billion acquisition of LinkedIn was a huge success for Microsoft. After the acquisition, LinkedIn remained independent, with only some clever integrations with the Office family in some places. As a result, Microsoft can offset some of Google and Facebook’s workplace intrusions with its powerful corporate social network, and Microsoft’s Office line has remained undefeated to this day.
Even the acquisition of GitHub is a success story. GitHub also remains independent, but it’s important that GitHub provides data that helps Microsoft understand how developers are responding to global application needs.
If Microsoft succeeds in acquiring TikTok, it is likely that the acquired TikTok will continue to operate independently. Microsoft’s failure to buy Skype and Nokia’s handset business has left the company less likely to continue to consolidate its acquisition. Microsoft is also inexperienced in content review and may not be adept at dealing with the range of headaches that content auditing can cause, so it is unlikely to integrate the TikTok in depth or rebrand the TikTok. The acquisition of the TikTok business in English-speaking countries could also help Microsoft avoid some of the complex audits that have plagued Facebook and Twitter. Curiously, Microsoft did not target TikTok’s UK operations. (The United Kingdom, the United Kingdom, New Zealand, Australia and Canada are all intelligence-sharing partners of the Five Eyes Alliance.) )
Running TikTok independently allows Microsoft to take full advantage of all of TikTok’s key data and integration points, while TikTok can also be Microsoft’s dream product to compete with YouTube and Facebook. In 2006, Microsoft partnered with News Corporation and NBC Universal to launch Soapbox on the MSN video service. But Soapbox is not a YouTube rival at all, and it ended a few years later. No way, Microsoft has to choose YouTube as its main platform for sharing its videos.
In 2012, Microsoft also tried to launch its own social network, Socl, and five years later the project failed. After investing $240 million in Facebook in 2007, Microsoft is not unaware of Facebook’s growth potential. TikTok is fast moving into the next big-potential social media space, competing directly with Snapchat, Instagram and Facebook, both in size and video sharing and commenting.
The final outcome of Microsoft’s acquisition of TikTok is hard to predict. But for Microsoft, the acquisition means a lot. Previously, Microsoft would have previously confirmed that takeover talks were under way until a deal was struck. This time, Microsoft posted an article confirming the news, thanks in deed to President Trump’s intervention. Reports suggest that Microsoft’s post is likely to be a strong source of pressure from the president’s allies to publicly acknowledge the potential deal.
But in any case, it’s a complicated deal, and Microsoft is already in it. Owning TikTok does help Microsoft, but if the deal is successful, the deal will also help President Trump.
The conversation about acquiring TikTok is likely to go through more twists and turns in the coming weeks. But for now, Microsoft has said it will close takeover talks by September 15. Wait, time is passing by bit by little.