Microsoft nears big bet on TikTok after risky LinkedIn deal shows promise by peard33 $MSFT
OAKLAND, Calif. - Microsoft Corp’s potential acquisition of short-video app TikTok carries myriad risks, thrusting it into the politically fraught social media business and Sino-U.S. conflict amid increased scrutiny of big-tech companies.
Microsoft on Sunday said it aims to complete a deal by Sept. 15 for TikTok’s U.S., Canada, Australia and New Zealand operations. It is likely to have an edge in pricing negotiations as the U.S. is effectively forcing TikTok’s Chinese parent, ByteDance, to sell by threatening to ban the app as a security risk.
“Does Microsoft really want to own an app that breeds conspiracy theories in tweens?” said Hank Green, YouTube star and chief executive of educational media company Complexly. He said TikTok removes content to maintain “a certain feel”, and could face public challenges over such decisions more often under a bigger name such as Microsoft.
Some concerns may have been overblown. Microsoft has avoided antitrust and privacy scrutiny with a cautious approach to connecting LinkedIn to other products, such as Outlook, and analysts have largely viewed the deal as a success in terms of synergies. TikTok is a bigger gamble because it caters to a less-affluent audience than LinkedIn, where advertisers typically pay more to attract wealthier consumers. TikTok’s ad sales team and technology also are far less mature than LinkedIn’s were, and TikTok faces greater competition.
LinkedIn “was bought on domination of a sector, good revenue, and good margins,” said Mike Vorhaus, head of Vorhaus Advisors. “TikTok is going to be valued based on its incredible user growth and mobile advertising revenue opportunities.”
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