5 reasons why Microsoft is even entertaining a Tik Tok purchase

It's hard to know what to make of this Microsoft acquiring Tik Tok talk, but here are some theories on why this wacky merger dance is happening now.
Written by Larry Dignan, Contributor

Microsoft's talks to acquire Tik Tok don't make a whole lot of sense on the surface. In fact, nothing about this deal makes sense given you have a tech giant that is known for the enterprise, President Trump tweeting about Tik Tok, legislators chiming in and a 45-day deal deadline.

Sure, I've read a few Wall Street analysts do some mental gymnastics to argue for the Microsoft purchase of Tik Tok. Depending on price ($10 billion too good to pass up and $50 billion crazy), Microsoft CEO Satya Nadella is going to have some explaining to do.

With all that said, here is a bit of informed speculation about why this Microsoft-Tik Tok lunacy is happening.

1. The Department of Defense's JEDI cloud contract is to be announced soon. Microsoft won the $10 billion cloud contract over Amazon Web Services for the military's cloud transformation contract. Trump isn't exactly a fan of Amazon or CEO Jeff Bezos, who owns the Washington Post. Microsoft and AWS have been duking it out in court throughout 2019 and 2020 and now the JEDI contract will be reannounced potentially this month after an Inspector General report

See the calendar overlap here? If you do then you're a cynical person like me. Perhaps there is no connection, but it's not a reach to envision a JEDI contract being mentioned in the same breath as a buyout of Tik Tok. Disclosure: This is my cynical opinion, but the timing makes me go hmm.

2. Microsoft is grabbing headlines about Tik Tok to avoid questions about why the software and cloud giant isn't buying Arm from Softbank. Clearly, Microsoft has $40 billion or so burning a hole in its pocket. Softbank is looking to sell Arm and Nvidia is reportedly interested. Surely, other companies (Apple, Qualcomm and perhaps AMD and Intel) would be interested in Arm too, but the purchase of that chip intellectual property would face regulatory hurdles. Generally speaking, Arm is best held with a company not in the mobile game and Microsoft could be a good fit. Microsoft, which knows a bit about licensing, would probably do well with Arm. Why not bid for Arm over Tik Tok?

3. Microsoft just can't quit you consumers. Microsoft just scrapped Mixer, started Band and then killed it and had the Windows Phone debacle. And remember when Cortana was going to thump Alexa, Google Assistant and Siri? Oh yeah, Cortana didn't exactly thrive (still could beat Siri though but whatever) and has gone corporate. Now Microsoft has a consumer success with Xbox and hasn't screwed up Minecraft, but the Tik Tok hurdles are much larger. Microsoft can't just buy Tik Tok and leave it alone. The company will have all sorts of data, privacy and integration issues.

4. Microsoft may be able to get Tik Tok at a fire sale price. We don't know what Tik Tok would really fetch given that it's on the US government's hit list. Maybe Microsoft can get Tik Tok for really cheap. The problem here is that Microsoft can't exactly flip Tik Tok to Facebook after those big tech House hearings. Tik Tok may be one complicated reference customer for Microsoft Azure.

5. Nadella has done too well as CEO of Microsoft. It's hard to find any Nadella flops with Microsoft. Perhaps Nadella is miffed that he wasn't viewed as big tech monopolist to Washington DC pols and wants a Steve Ballmer type moment to get attention. If Microsoft buys Tik Tok rest assured Nadella will get attention. 

In the end, I'd argue that Microsoft should walk (actually run) from this Tik Tok talk. There are simply too many headaches and let the Feds figure out how to shut down Tik Tok and annoy users that may just have turned 18 and can vote.  

Editorial standards