Microsoft Corp is in talks to buy ByteDance-owned TikTok, the New York Times reported yesterday, citing a source.
The discussions between Microsoft and TikTok were first reported earlier yesterday by FOX Business, the Times said.
Meanwhile, Microsoft Corp could re-energise its advertising business with a huge supply of video if it follows through on acquiring TikTok’s US operations from ByteDance.
Reuters reported yesterday, citing a source familiar with the matter, that Microsoft is in exploratory deal talks as the US government prepares to force China-based ByteDance to divest its video app TikTok over data security concerns.
Microsoft generates the bulk of its US$143 billion (RM606.3) in annual revenue by licensing software such as Windows and Office as well as cloud storage and computing tools through its Azure service.
The company, with advertising supported businesses including its Bing search engine, MSN news service and LinkedIn business social network, disclosed this month that its search ads sales grew 1 per cent to US$7.7 billion over the last year. But that growth was flat when excluding fees it pays to partner websites and apps.
Social media services, including Facebook Inc and Alphabet Inc’s YouTube, have seen their sales growth continue during the pandemic as users spend more time entertaining themselves online — particularly with video — and advertisers follow them there.
Without an entertainment service aimed at a broad audience, Microsoft has struggled to capture the increasingly lucrative videos flowing to YouTube, Facebook and more recently TikTok, which widely opened its ad tools this month.
Increased US regulatory scrutiny of potentially anticompetitive behaviour by Facebook and YouTube have likely diminished their ability to purchase a major competitor soon, according to antitrust experts. Microsoft, though, faces fewer constraints.
“Its consumer strategy remains in flux and an aggressive acquisition (or strategic investment) of TikTok would be Microsoft throwing its hat in the ring and trying to compete with other tech giants in a new avenue of growth,” Wedbush financial analyst Dan Ives said in a statement yesterday. — REUTERS/NEW YORK TIMES