Photo Credit: Microsoft
With TikTok’s days now numbered in the U.S., it looks like tech giant Microsoft has emerged as the most likely buyer for the popular social media platform. According to published reports, Microsoft could be willing to pay as much as $30 billion for TikTok, making it one of the largest acquisitions in the company’s 45-year history. Remember – Microsoft paid $26.2 billion for LinkedIn back in June 2016, so a $30 billion deal is not entirely out of the question. But here’s what everybody wants to know: What, exactly, is Microsoft actually going to do with TikTok if it gets approval from the White House to acquire it?
Scenario 1: Add TikTok functionality to existing platforms like LinkedIn and Skype
The baseline scenario is the most likely scenario. Once it acquires TikTok, Microsoft will look for ways to add popular TikTok features to all of its other platforms, especially LinkedIn and Skype. For example, back in 2016, Microsoft began the process of turning Skype into a form of “Snapchat Lite” by adding in features like “highlights” and giving users the option to add in emoticons, stickers, and GIFs on Skype calls. It was all part of making Skype more social by making it more like Snapchat. So, it’s quite conceivable that your future LinkedIn updates and notifications will soon include cool TikTok dance routines and lip sync impersonations by your talented office colleagues…
Scenario 2: Use TikTok to boost the appeal of its Xbox gaming platform
One of the most successful pieces of the Microsoft business empire is the Xbox gaming platform, and the key to lining up lots of millennial gamers is to have plenty of features and functionality that appeal to young users in the 18-to-34 demographic. And this is exactly where TikTok could prove so valuable, since TikTok is still very much a teen social media sensation. Your parents may have heard about TikTok, but chances are, they are still on Facebook. It’s a different story entirely with your kids, who might be spending hours a day on the addictive platform.
TikTok reportedly has tens of millions of young U.S. users, and the fact that the government is trying to ban TikTok entirely probably makes it all the more attractive to young kids looking for things their parents don’t approve of. From this perspective, TikTok would make a much better fit for Microsoft’s gaming business rather than its conventional social media business (i.e. LinkedIn). If nothing else, it could convince young teens to move from Amazon’s Twitch to Microsoft for all their gaming needs.
Scenario 3: Hold onto TikTok for a short time and then flip it for a huge profit
Some Wall Street analysts still don’t buy into the idea of Microsoft buying TikTok, given all the privacy and national security issues plaguing the company. Their notion is that Microsoft is simply looking to “flip” TikTok for a huge profit at some later date. TikTok is being sold at fire sale prices, so it’s conceivable, they say, that Microsoft could eventually sell TikTok for close to $200 billion. That would represent a nearly 7x return on its $30 billion investment. Once all the fear mongering about TikTok subsides, people might realize it’s not so bad after all, and some other tech or media company might decide to buy it for a huge price in order to prove that they know what the younger generation wants. After all, isn’t that the reason that Time Warner bought up AOL and made it the centerpiece of its media and Internet business back in 2000? And the reason that media mogul Rupert Murdoch bought up MySpace in 2005 for $580 million? There’s always a greater fool out there willing to pay inflated prices for the Next Big Thing.
Of course, there’s no guaranteeing that Microsoft will actually know what to do with TikTok once it buys it. Bill Gates, for example, has called TikTok a “poisoned chalice,” and obviously doesn’t think it will amount to anything good for Microsoft. And remember, Microsoft doesn’t exactly have a great track record when it comes to social media, tech and emerging new technologies. This is the same company that created the Zune to compete with the Apple iPod, the same company that created the Kin phone for young teens and the same company that thought it could resurrect Nokia and turn it into a hot new mobile property stuffed full with Windows Phone software.
But definitely keep an eye on this space. As we noted before, Microsoft is “the biggest social media company that nobody talks about.” Well, if Microsoft buys TikTok, it will suddenly become the biggest social media company that everybody is talking about…