TikTok Takeover Update: Twitter Looking for a Way In, Microsoft Facing Staff Backlash

With only 35 days left to negotiate a buy-out, or face a potential ban in the US, the pressure is on for TikTok, and its potential suitors, to get the details of any such deal straight, and establish what, exactly, the platform is worth, and whether it’s a viable prospect for their respective future plans.

Thus far, only one company has publicly stated that it’s looking to purchase the short-form video app, but in recent days, two more organizations have reportedly expressed an interest in buying the app – though in slightly altered form to the Microsoft proposal.

On Saturday, The Wall Street Journal reported that Twitter had held preliminary talks about “a potential combination with TikTok”, which would enable the platform to continue operating in the US, in partnership with Twitter.

That inspired many mocking tweets from those within the tech sector – ‘didn’t Twitter already own Vine, which was essentially TikTok before TikTok?

The idea that Twitter might want to go down that road again seems odd, especially considering that TikTok is in largely the same position as Vine was at peak, with significant cultural success, but limited avenues for monetization. Add to that the fact that TikTok is currently being valued at around $30 billion, while Twitter is at $29 billion, and there would clearly be some significant hurdles to overcome in any such deal.  

We don’t have much detail to go on, but the reported talks have more focused on a partnership-type arrangement, as opposed to a takeover, which also seems strange. Sure, short-form video is in Twitter’s wheelhouse (again, ala Vine) and improved integration of TikTok sharing on Twitter could work, in a way. But TikTok also has moderation concerns, the censorship issues – the challenges TikTok that faces moving forward have not been key areas of strength for Jack Dorsey and Co. 

In essence, it’s fair to say that a potential Twitter takeover of, or tie-up with TikTok is a long shot, if it’s any shot at all. I wouldn’t be envisioning a new feed of TikTok content alongside your Twitter feed anytime soon.

But, as Yoda says: ‘There is another’ – reports have also suggested that investment firm Sequoia Capital, which first invested in ByteDance back in 2014, is also looking at ways in which it might be able to wrest the US operations of TikTok from the company, in order to keep the app alive.

As per WSJ:

Sequoia’s global managing partner, in recent weeks has been pressing contacts in the [Trump] administration, including Treasury Secretary Steven Mnuchin and senior White House adviser Jared Kushner, to craft a solution that would enable TikTok to keep operating in the U.S., according to people familiar with those discussions.”

Both Sequoia Capital and General Atlantic have been actively trying to find ways in which they might be able to get involved in any TikTok US spin-off since President Trump first announced the pending ban last month. Any such deal would likely be limited to TikTok’s US operations only, which could be problematic, and it still seems like Microsoft, which is looking to buy all of TikTok, would be the preferred suitor, on balance.

But that, also, could be under a cloud.

According to a leaked report, Microsoft is now also facing internal backlash over a potential TikTok deal, with employees saying any such bid would be ‘unethical’ and against the interests of the company.

Employee dissatisfaction, of course, is not a definitive impediment to such a decision, but the opposition could underline broader concerns for the potential deal, which many don’t see as a great fit. And while Microsoft has seen success with other recent acquisitions like LinkedIn and Minecraft by allowing the companies to operate with a level of automony, the view is that, given the various controversies and concerns, Microsoft would need to take a more hands-on role with TikTok.

That could make the platform more problematic than it’s worth – especially with competitors like Facebook already chipping away at TikTok’s user base.   

As we’ve noted previously, there would also be other impediments to consider in Microsoft’s purchase of the platform – most notably the potential fall-out with the Chinese regime, which is not particularly pleased that the US Government is essentially forcing a Chinese business to sell to a US group. Microsoft has over 6,000 employees in China, and conducts billions in business deals in the nation every year. If Microsoft does purchase TikTok, the CCP could look to limit Microsoft’s capacity to operate in the region.

Seems like a big risk to take.

Microsoft remains the front-runner for the purchase, with all the other big tech companies staying out of the race for the time being. But the evidence suggests that even Microsoft may well pull out of the deal, given the awkward fit and associated concerns.

Then there are technical concerns around how long it would actually take to separate TikTok from ByteDance, and how that aligns with the White House Executive Order, while TikTok itself is reportedly considering legal action against the Trump Administration over its handling of the official ruling against the app, which TikTok says is not evidence-based.

Again, there are only 35 days left to negotiate, based on the original deadline, and there are clearly a lot of issues to sort out. 

And when you’re talking about a deal worth up to $30 billion – a potentially make or break acquisition, even for a big tech platform like Microsoft – the details absolutely matter. 

Like everything in 2020, expect things to get a lot messier before the path forward for TikTok becomes clear.  

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