Microsoft CEO Satya Nadella has called last year’s plan for his company to acquire part of the giant social network TikTok – promoted by Donald Trump’s White House – “the strangest thing I’ve ever sort of worked on”.
The tech kingpin recalled the bizarre events when speaking at the Code Conference in Beverly Hills, California on Monday.
It all started in August 2020. At the time, Trump was threatening to come down hard on China’s TikTok, citing data privacy concerns.
However, some commentators suggested that the threats had more to do with the president’s ongoing feud with Beijing, rather than any genuine concern over user data, which was not dissimilar to that obtained by Facebook or other Western social platforms.
Whatever the reason, the administration threatened to ban TikTok unless its parent company, ByteDance, could find a US buyer for it. Microsoft seemed to fit the bill.
“President Trump, I think he had sort of a particular point of view on what he was trying to get done there,” Nadella recalled, according to CNBC.
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In August last year, Microsoft announced that it was in talks to acquire parts of TikTok after Nadella meet with Trump. If the complicated deal had gone through, it would have left Microsoft owning TikTok’s US, Canadian, Australian and New Zealand operations.
Microsoft eventually backed out of the deal in September 2020 when TikTok picked Oracle as its cloud provider.
President Joe Biden signed an executive order in June revoking the Trump administration order to ban the app.
The same month, the White House issued an executive order that introduced stricter rules for Chinese apps, forcing them to ramp up their efforts to protect private data if they want to keep operating in the US.
Microsoft buying TikTok actually might have made sense
To some extent, the Microsoft-TikTok deal would’ve made sense. Microsoft already had skin in the social media game following its $26.2bn acquisition of LinkedIn in 2016, and it has also been running the Xbox network since 2002.
Nadella said he “was pretty intrigued” about the prospect of buying “a great property” like TikTok. However, the Microsoft CEO is adamant that in fact ByteDance’s subsidiary made the first move.
“First of all, you’ve got to remember, TikTok came to us, we didn’t go to TikTok,” Nadella said. “TikTok was caught in between a lot of issues that they were having across two capitals, and they wanted to partner.”
The Microsoft CEO’s assertion was that TikTok would make a great partner to Redmond and vice versa thanks to Microsoft’s cloud platform, security technology and experience protecting children from harm.
A recent thematic scorecard from GlobalData backs him up. It suggests that ByteDance and Microsoft are neck and neck at the two top spots of the leading social media companies in the market, outperforming the likes of Twitter and Facebook on key issues such as data privacy and antitrust issues.
As Verdict reported at the time, Microsoft’s employees seemed positive about the prospect of bringing TikTok into their company, according to anonymous polls.
Nevertheless, it seems that Microsoft people shared their CEO’s concerns over their country’s commander in chief pushing them to acquire a Chinese company.
“The Yammer discussions when people found out Satya had been talking to Donald Trump were… interesting,” tweeted Kevin Beaumont, the renowned UK cybersecurity expert who did a brief stint with Microsoft as a senior threat intelligence analyst between 2020 and 2021.
To be fair it was a strange time to be a Microsoft employee too.
The Yammer discussions when people found out Satya had been talking to Donald Trump was… interesting. https://t.co/UMjkGnVsyq
— Kevin Beaumont (@GossiTheDog) September 28, 2021
What’s the deal? It’s complicated
Microsoft is no stranger to buying new companies. Over the past year it has completed acquisitions of ZeniMax, the video game studio, and the Marsden Group, an industrial technology innovation and rapid prototyping company. In 2020, it acquired Metaswitch Networks, Softomotive, CyberX, Orions Systems and Smash.gg.
Still, the TikTok deal would’ve been significant even for Redmond. As The Verge noted at the time, Microsoft wasn’t trying to buy the entire ByteDance subsidiary, but the US, Canada, Australia and New Zealand portions of TikTok. No one had ever attempted to split up a social media company along regional lines like that. The unprecedented nature of the deal would arguably be difficult for even Microsoft to navigate.
But let’s say that this wouldn’t have stopped Microsoft from acquiring TikTok. What then?
Well, Nadella and Microsoft would have been left with an odd and incomplete regional jigsaw of TikTok. This would have meant some significant hurdles to overcome.
Splitting up TikTok would also create challenges in terms of internal development teams, advertisers and influencers, and would give users less content to enjoy.
While it would’ve been interesting to see Microsoft attempt to overcome those obstacles, we may never know how Nadella and his team might have tackled the problem.