Why Microsoft wants to buy TikTok

Popular short-form video app TikTok is on the verge of getting the ban in the United States. India recently banned TikTok due to security reasons and its chines connection. Multiple media reported that Microsoft is in advance talks to buy TikTok U.S. operations. How does TikTok would benefit Microsoft? If it happens, the Microsoft TikTok deal would be a win-win deal. Here are the reasons Microsoft wants to buy TikTok:

To increase Market Share in the digital advertising space.

As of the 2019 year-end report, Microsoft is #7 in the digital advertising market share. Google is the largest digital ad seller globally, accounting for 31% of worldwide ad spending, with $103.73 billion. Facebook is No. 2, with $67.37 billion in net ad revenues. Google’s digital ad revenue is driven by Google search Engine, whereas Facebook’s digital ad revenue comes from the Facebook Social Networking platform.

TikTok has a high potential to compete with Google and Facebook in the digital Ad space due to its popularity and substantial diverse user base.

TikTok’s digital ad revenue overgrew in the last few months. The current situation where many retail companies are pulling their advertisement out from the Facebook platform will be a golden opportunity for Microsoft to tap those customers if it buys TikTok.

Rise of Online Learning post Covid-19

If you use TikTok, you would have noticed, TikTok is not just about music and dance. Many creators are creating top-notch quality content on Learning new skills, Soft skills, Motivational videos, tips, and Tricks, etc. TikTok has invested a lot of money globally for EdTech to make it more than just dance and music and connect with a diverse user base.

Reentry of TikTok in Indian Market

When TikTok got banned in India, TikTok was performing well, and India was one of the world’s biggest markets. Even though this Microsoft negotiation was to buy TikTok U.S. operation, India played a pivotal role. If Microsoft buys TikTok, then it can re-enter in India. TikTok can come back to India with Microsoft as a parent company. There is a significant amount that Google is going to invest in India; Microsoft can influence the EdTech market with the same plan that TikTok had for India.¬†

Microsoft has a history of buying companies with a large userbase. If you look at all the important acquisitions that Microsoft had, it always acquires companies with a more massive user base, whether it was LinkedIn or GitHub or Linda. 

Why would the U.S. ban the TikTok:

The reason is precisely the same why India banned TikTok. China-based company ByteDance owns TikTok, and no matter how many promises are made by Byte dance, there is a potential risk as this company is owned and controlled by China. Considering current U.S.- China scenarios U.S. does not want to take any risk of having Chinese root products in its market.

It is challenging for regular users to understand Apps policies on collecting and using user data from the mobile. TikTok is so prevalent in the U.S. that there is a potential risk that these user’s data is in the hands of a Chines company that can be a potential risk as China owns the parent company.

The U.S. has been investigating potential security risks due to its control of the App, and Trump’s decision could be announced soon as per people aware of the matter.

According to the Wall Street Journal reported, Trump told reporters on Air Force One Friday that he preferred to ban TikTok, and that he would not support a sale.

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