Microsoft’s TikTok grab: Inspired or naive?

Satya Nadella and TikTok

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EPA / Getty Images

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The purchase of TikTok could pose risks to Microsoft of Satya Nadella

Last week, Congress grilled Apple, Amazon, Google and Facebook.

Microsoft was not invited to the party.

I thought the Microsoft boss would be relieved that his company was safe out of the line of fire.

It seems I was wrong.

What I didn’t know at the time was that Satya Nadella was actually looking to expand deeper into social media.

Microsoft already owns LinkedIn. The acquisition of the video-based social media platform TikTok, however, would hold it accountable for its controversial content.

In short, it would open up to all the criticism and accusations that other big social media companies have faced in recent years.

TikTok does not allow political ads. He wants to encourage fun, creative, and shareable content. But TikTok – almost unknowingly – has turned political.

For example, videos using the #BLM hashtag, which references Black Lives Matter, have been viewed more than 12 billion times; videos using the hashtag # Trump2020 more than seven billion.

Conspiracy theories

There are also many controversial things about the platform, from conspiracy theories to hateful content.

If Microsoft buys TikTok, make no mistake, it is buying a platform with a lot of politics.

And this matters. Facebook, which owns Instagram; Google, which owns YouTube, and Twitter have learned the hard way that trying to moderate political content can be a nightmare.

What do you do when Donald Trump questions mail-order voting? Or does someone stick a video recommending hydroxychloroquine? Or does a user deny climate change? These are the headaches these companies face every day.

Although last week’s Congressional hearing was about antitrust, many of the questions had to do with political interference on companies’ social media platforms.

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Jeff Bezos, Tim Cook, Mark Zuckerberg and Sundar Pichai faced a Congressional barbecue

These are the headaches that Microsoft is currently free from. Why, then, is a company actively wooing them?

Nadella, apparently, can’t resist a deal

He thinks he can buy the US arm of TikTok, which would also include TikTok in Canada, Australia and New Zealand, for a basement price.

After all, Trump says he’ll ban TikTok if the company can’t find a suitor by September 15. This places Microsoft in a dominant negotiating position.

Microsoft’s technological expertise also means that U.S. Republicans are likely to trust the company to safeguard user data from Beijing’s cyber-spies.

And because LinkedIn ad spend is a fraction of what Facebook or YouTube collects, the purchase is unlikely to be trapped in anti-competition legislation.

Important Chinese presence

If you were to draw a cartoon of Nadella right now, she would have dollar signs for her eyes.

Still, there are still potential pitfalls.

The China Daily – a state-owned newspaper – described TikTok’s treatment as “theft” and said China “had many ways of responding if the administration carries out its smash and grab program.”

This is a problem for Microsoft because unlike some US tech giants, it has a major presence in China.

In fact, Microsoft boasts on its website that: “Today, our most comprehensive subsidiary and largest R&D center outside the US is located in China.”

To put it bluntly, if Beijing is seen by Microsoft as having cashed in on TikTok, China has the levers it can pull to damage it.

It would be a spectacular own goal for Microsoft, in a market where Bill Gates first introduced the company in 1992.

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EPA

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President Trump has said that TikTok will be banned unless sold

And it gets worse.

White House trade adviser Peter Navarro was asked Monday by CNN if Microsoft would be compromised by the deal.

“Maybe Microsoft could sell its Chinese holdings,” he said.

This really plays at the heart of what is happening here. The Trump administration doesn’t really like Chinese technology in the US, and neither do large US tech companies get too close to Beijing.

This, therefore, is a perfect opportunity for the president. Remember that the deal is totally dependent on Trump’s patronage.

Nadella said she is exploring the possibility of a purchase only after getting the green light from President Trump.

Geopolitical baggage

Trump has already said that the US taxpayer should get a curtailment of any deal. But what else does Trump want? This will worry Microsoft.

In fact, the more you think about it, the more likely it is that Microsoft, by acquiring TikTok, also acquires its geopolitical baggage.

As big as Microsoft, it’s still small enough to be a pawn in a chess match between two global superpowers.

The question now: is it a risk that Nadella is willing to take? Or will he survey the landscape and see TikTok as too big a bet?

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