Microsoft confirmed its preparations to continue the discussion on the purchase of the short video platform, TikTok in the United States. Satya Nadella on his blog post revealed about the discussions it had with the US President Donald Trump on the security concerns and its plan to seal the deal with the parent company of TikTok Bytedance by September 15, 2020.
Microsoft said in its blog, Microsoft is very well committed to addressing the president’s concerns regarding the security of the users and to provide complete security review, also providing proper economic benefits to the United States, including the United States Treasury. Discussions with the parent company Bytedance will be completed in no less than September 15, 2020.
Tiktok was launched by Bytedance in 2017 then followed by Musical.ly, which is a video service popular among the teens in Europe and the US, and then combined the two. The fun and the goofy video’s made it widely popular. It had hundreds of millions of users globally and tens of millions of users from the US alone. US tech giants like Facebook and Snapchat saw it as a competitive threat.
This deal would be a victory for both the companies, as it will be a relief to TikTok and it’s parent company Bytedance Ltd. also will make Microsoft Corp. a major player in the social media arena.
Bytedance had revenue of $17 billion last year with profits of $3 billion. This was for the entire company with a stable of at least 20 apps including Douyin which is the local version of TikTok available to Chinese users and news feed Toutiao. TikTok last year earned a revenue of around $ 300 million globally which accounts to about 2% of an entire company. This year they TikTok is aiming for $500 million in sales in the US, from the reports.
If Microsoft takes over TikTok, it will operate in countries including the United States, Canada, Australia and New Zealand. The two companies have provided their notice of intent to explore a preliminary proposal regarding the purchase of the TikTok service in the United States, Canada, Australia and New Zealand and would result in Microsoft owning and operating TikTok in these markets.
Industry Analyst of Moor Insights& Strategy, Patrick said Purchase of TikTok would give a significant change of direction from Microsoft CEO Satya Nadella’s focus on workplace software and will make people more productive.