What's going on?
TikTok, the world’s fastest-growing social media app, has until September 15th to get rid of its US segment – and on Sunday, Microsoft told the company, “we belong together”.
What does this mean?
The US government has been making life difficult for TikTok since June, and has even threatened to ban the app citing national security concerns. And while Chinese parent company ByteDance would prefer not to lose the platform at all, it’d rather it gets to live on – even if that means a new majority owner.
Enter Microsoft: all it wants for August is to buy TikTok’s US, Canadian, Australian, and New Zealand segments from ByteDance, though they’re yet to agree on a price. And the tech giant’s likely hoping it can get a deal approved quickly: it wasn’t involved in last week’s tech hearings, has said it’s willing to work with the US government on this, and has promised to bring back American users’ data – which is currently being exported to China.
Why should I care?
The bigger picture: Heartbreaker.
Microsoft has been benefiting from corporate customers that spend big on its cloud products recently, but its purchase of TikTok could represent a shift towards consumer-facing products. The move could also spell more competition for Facebook and Snapchat, though the latter’s probably hoping the new music feature it’s just integrated into its app will keep it safe and sound. Plus, TikTok’s still not the advertising powerhouse that those rivals are – but optimistic investors who sent the stock up 5% on Monday will be watching closely to see if Microsoft can change that.
Zooming out: Make it happen.
Big companies were striking deals left and right on Monday: Siemens Healthineers agreed to buy rival medical tech company Varian for $16 billion, 7-Eleven’s owner agreed to the $21 billion purchase of Marathon’s Speedway gas stations, and Google announced a $450 million investment in security firm ADT, whose stock jumped about 60% (tweet this).