Microsoft CEO Satya Nadella discussed an acquisition of TikTok with President Donald Trump Sunday<\/p>\n
Days after Microsoft\u2019s MSFT<\/a> +5.6%<\/a> big-tech rivals faced lawmakers over their dominance in the online ad-business, among other subjects, CEO Satya Nadella phoned the White House to discuss a deal to acquire social media platform TikTok that could reshape Microsoft\u2019s future as a consumer-facing business.<\/p>\n The potential acquisition \u2014 expected to be valued around $40 billion \u2014 would be Microsoft\u2019s largest, and riskiest, in a string of deals by Nadella, who has rewritten the company\u2019s reputation for unsuccessful buys and focused on the enterprise space through pick-ups including LinkedIn and GitHub. By making a bid for TikTok, the Chinese-owned, hugely popular social platform, Nadella is shifting his attention to the consumer-ad space where Microsoft could attract the regulatory spotlight currently facing its rivals.<\/p>\n \u201cThere’s a big pile of ad revenue out there basically captured by Google GOOGL<\/a> -0.3%<\/a>, Amazon AMZN<\/a> -1.7%<\/a>, and Facebook,\u201d says Jai Das, a managing director and cofounder at venture capital firm Sapphire Ventures. \u201cThis would be a way for Microsoft to access that.\u201d<\/p>\n Microsoft received the green light from the Trump administration on Monday to pursue an acquisition of TikTok\u2019s U.S. operations from its China-based parent company ByteDance, which had faced threats from the White House of being banned over national security concerns. More than 100 million people use TikTok to post short, and sometimes viral, videos that generate revenue with ads.<\/p>\n In a blog post Sunday, Microsoft said it would complete the prospective deal \u2014 which would also include TikTok\u2019s operations in Australia, Canada and New Zealand \u2014 by September 15, and would invite U.S.-based minority investors to participate. The company said it would address privacy concerns by committing to transferring all of TikTok\u2019s data to U.S.-based servers, and delete data from servers outside the country.<\/p>\n The move has struck some observers as good business sense; it\u2019s proven popular with investors, too, as Microsoft shares closed Monday up $11.49, or 5.6%, adding more market capitalization to Microsoft\u2019s stock than the acquisition would cost the company.<\/p>\n But for TikTok to become a success story, Microsoft will need to pull off its largest, and most-scrutinized absorption of another business in its history \u2014 a history that, until Nadella, was spotty. Under then-CEO Steve Ballmer, Microsoft acquired Skype in 2011 for $8.5 billion, only to watch as the company lost attention to rival products from Apple AAPL<\/a> +2.5%<\/a>, Facebook and more recent businesses like Zoom. And in 2013, it acquired the failing mobile phone-maker Nokia for $7.6 billion, an investment that was essentially written off<\/a>. The company\u2019s Bing platform also had minimal success competing against Google\u2019s search engine.<\/p>\n Momentum changed when Nadella was appointed CEO in 2014, who focused first on buying up enterprise-facing assets. Microsoft paid<\/a> $26 billion for LinkedIn in 2016, an acquisition considered successful, and GitHub, which was acquired<\/a> in 2018 for $7.5 billion has served as a customer runway to Microsoft\u2019s cloud services business, Azure.<\/p>\n TikTok represents a new challenge for Nadella as it potentially joins a consumer-facing portfolio that includes the Xbox gaming division, Surface tablets and Minecraft. Like the enterprise companies before it, TikTok would likely remain a siloed entity for a couple of years, says Soma Somasegar, a former vice president at Microsoft who is now a managing director at Madrona Venture Group. Such a period of separation would also provide time for Microsoft to navigate any regulatory issues linked to separating TikTok from its Chinese owner, Somasegar says.<\/p>\n Beyond that, Somasegar says the platform could have future integration with Microsoft\u2019s other consumer-facing brands. For example, TikTok\u2019s ad business could be cross-promoted on Bing. And in gaming TikTok could provide complementary streaming services to Xbox\u2019s platform.<\/p>\n If TikTok is successfully integrated, Microsoft would become established as the fourth major player in the online ad revenue business. Forecasts on TikTok\u2019s growth vary, but the company\u2019s U.S. operations are expected to generate close to $500 million in revenue in 2020, and about $1 billion in 2021, according to Dan Ives, an analyst at Wedbush. With these metrics, Ives estimates that TikTok could become a $200 billion business in a couple of years. And Microsoft has the cash, Ives notes, with $136 billion in cash reserves today, and expectations of generating $39 billion in free cash flow for 2020.<\/p>\n As Facebook, Google and Amazon joined Apple in testifying last week, Microsoft\u2019s absence was notable to industry watchers. Should it bring in TikTok to fast-track its competition with their consumer products, the acquisition will signal a push into a new phase of ambitions under Nadella to compete on more fronts. As the venture capitalist Das puts it: \u201cTikTok is a way to bring that DNA to the company.\u201d<\/p>\n Source: Forbes<\/p>\n","protected":false},"excerpt":{"rendered":" Microsoft CEO Satya Nadella discussed an acquisition of TikTok with President Donald Trump Sunday Days after Microsoft\u2019s MSFT +5.6% big-tech rivals faced lawmakers over their dominance in the online ad-business, among other subjects, CEO Satya Nadella phoned the White House to discuss a deal to acquire social media platform TikTok that could reshape Microsoft\u2019s future […]<\/p>\n","protected":false},"author":2,"featured_media":10780,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5],"tags":[],"class_list":["post-10779","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-international"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.funminews.com\/wp-content\/uploads\/2020\/08\/Microsoft-CEO-Satya-Nadella-discussed-an-acquisition-of-TikTok.jpg?fit=960%2C640&ssl=1","jetpack_likes_enabled":true,"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.funminews.com\/index.php\/wp-json\/wp\/v2\/posts\/10779","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.funminews.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.funminews.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.funminews.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.funminews.com\/index.php\/wp-json\/wp\/v2\/comments?post=10779"}],"version-history":[{"count":0,"href":"https:\/\/www.funminews.com\/index.php\/wp-json\/wp\/v2\/posts\/10779\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.funminews.com\/index.php\/wp-json\/wp\/v2\/media\/10780"}],"wp:attachment":[{"href":"https:\/\/www.funminews.com\/index.php\/wp-json\/wp\/v2\/media?parent=10779"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.funminews.com\/index.php\/wp-json\/wp\/v2\/categories?post=10779"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.funminews.com\/index.php\/wp-json\/wp\/v2\/tags?post=10779"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}