Wednesday September 16, 2020
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After TikTok rejected his offer
TikTok’s great bidding war appears to be stitched up with the arrival of Oracle as the winner or, as the company has put it, the ‘preferred technology partner’ of the innovative social media app owned by the Chinese company. ByteDance. And that leaves Microsoft (MSFT), which was apparently the platform’s only serious competitor, as the loser.
Oracle (ORCL) has upheld the proposal, which it and TikTok hope to allay fears from President Trump and security experts that the app poses a national security risk, although we don’t yet know what will look like. the agreement itself.
Microsoft’s failure to secure at least one partnership with TikTok is a setback for the company in several ways. This means that the tech giant will not reach the millions of teens who use the social network, which allows users to share and watch short form videos, and expand its name recognition among members. Generation Z apart from its Office and Xbox software.
It also loses the data generated by these teens, which could help it develop more products and increase its advertising business.
But there might be a silver lining in Microsoft’s loss in that it won’t have to deal with the potential fallout that could arise if the deal doesn’t work out in the long run. It also helps Microsoft escape the kind of scrutiny that comes with working with a consumer-centric social network.
Name recognition and valuable data
Microsoft initially sought a deal to acquire TikTok, but that collapsed when Chinese government officials put in place new regulations limiting the export of certain artificial intelligence technologies, including the algorithm that offers videos. recommended to TikTok users based on their tastes.
Microsoft said it would have needed access to the algorithm to ensure the security and privacy of U.S. users and to combat the spread of disinformation.
If Microsoft had had access to TikTok through a sale, it would have been the company behind the hottest social network since Snapchat. TikTok’s appeal to teens and tweens gives it a better understanding of what motivates and attracts these young users. But putting Microsoft’s name in front of TikTok would also ensure those same users see the 45-year-old company as almost synonymous with the social network.
Teenagers don’t need to use Windows PCs like they used to in the past, and if they do, they certainly aren’t spending as much to use these PCs as they used to.
They don’t need to use Internet Explorer or the new Edge browser because they, like 66% of users, are on Google Chrome (GOOG, GOOGL). They don’t need to use Office, because they, with 57% of consumers, use Google Docs. They don’t need to use Bing because, well, they have Google. They may still be using Windows PCs, but schools are increasingly buying Google Chromebooks.
Additionally, they are likely to spend most of their time on their iPhone (AAPL) or Android phone. Microsoft missed the boat on mobile after its turn as a potential third smartphone option when its Windows Phone operating system failed to gain traction and was killed for good in 2019.
In fact, the one area where teens can frequently use a Microsoft product is Xbox, and even this one doesn’t have a majority market share in the gaming market, thanks to Sony’s PlayStation (SNE).
But name recognition isn’t all Microsoft has missed. The company could have had access to untold amounts of data produced by TikTok users. With this kind of information, Microsoft could have further strengthened its advertising activity. That alone could have put Microsoft on the path to challenging the likes of Google and Facebook (FB) for dominance in the online advertising industry.
Avoid scrutiny of a social network
Microsoft, however, has been able to avoid the kind of scrutiny that Google and Facebook have exercised over regulators in the United States and Europe precisely because it is largely not involved in the collection. user data like these services. In fact, Microsoft President Brad Smith has criticized tech companies and the data they contain.
The vast majority of Microsoft’s revenue comes from its Enterprise, Windows, Productivity, and Xbox operations. But if the company did end up jumping into the social media space, it would instantly open up to the same critics as these other tech giants.
It also ensures that Microsoft doesn’t have to deal with the additional drama that a tie-up with TikTok would entail. After all, social networking isn’t just popular with teenagers. He is also popular among those in Washington who have made political football out of him.
Missing out on the TikTok deal, which isn’t even the full acquisition Microsoft was seeking, avoids more pain than a “tech partnership” would have offered. It is a victory by a defeat. And while that may mean that Microsoft won’t be the company Gen Z comes to know as the brand behind today’s hottest social network, the company, and its market capitalization of over $ 1 trillion, will continue to perform well on its own.
By Daniel howley, technical writer. Follow him on @DanielHowley
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