Questions Continue To Emerge Over Viability Of Microsoft Corporation (NASDAQ:MSFT) Takeover Of TikTok


The viability of a Microsoft takeover of TikTok is a raging debate in the tech and social media industries. Then, Microsoft’s idea over the world’s most trendy social media company has come under intense scrutiny, with many analysts urging that the two companies are not a fit.

TikTok in a rush to exist the U.S

In an ongoing U.S-China trade war, President Trump has threatened to shut down TikTok’s operations in the U.S if an American company does not acquire it in 45 days. China-based ByteDance, the parent company of TikTok, has been sourcing for a potential buyer for the unit, with Microsoft being the first one to confirm ongoing talks.

Other techs and social media companies like Alphabet Inc Class C (NASDAQ: GOOG) and Facebook, Inc. (NASDAQ: FB) have stayed off the deal for fear of being flagged by antitrust regulators. Other reports have indicated that Twitter has also considered merging with TikTok although analysts argue that the math would be difficult for Twitter given to its modest market cap of just under $30 billion. TikTok is valued at between $35 and $40 billion.

Shaping Microsoft after acquiring TikTok

For Microsoft’s CEO, Satya Nadella, the completion of the acquisition of TikTok is likely to present another challenge. Reshaping the just acquired business without causing much disruption and damage to its current business.

Mr. Nadella is taking the light-touch strategy in Microsoft’s biggest acquisitions. The software giant acquired LinkedIn in 2016 for $26 billion but took years to integrate the business. The move was aimed at minimizing interruption to LinkedIn’s culture that had made it a success.

“This is not about changing the core of LinkedIn,” Mr. Nadella said at the time of the takeover. Two years later, Microsoft repeated the same strategy following the acquisition of developer collaboration platform GitHub Inc for $7.5 billion.

Therefore, it is safe to conclude that Microsoft will stick to its time long strategy by taking time to integrate TikTok into its operations. Trump’s executive order is expected to take effect in September and is likely to bar American transactions with TikTok’s parent company.