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Microsoft lost its bid to acquire TikTok’s US operations after parent company ByteDance stuck a deal to make Oracle its “trusted technology provider” in the US, bringing a months-long battle with the Trump administration closer to a conclusion.
Oracle has submitted a proposal to the US Treasury Department for approval, and details of the deal are still coming into focus. While the unpredictable nature of the TikTok deal — and the need for any bid to overcome lawmakers’ national security concerns around the app — makes it difficult to rule out any outcome, it appears Microsoft’s quest to acquire a stake in the wildly popular short-video app has come to an end.
As has been widely reported, the saga of $1.6 trillion Microsoft and TikTok was unusual and constantly changing — with TikTok at the center of tensions between the United States and China, the normal deal process was supplanted by a need to come up with a solution that would satisfy both governments and the app’s China-based owner Bytedance alike.
Microsoft was first on the scene when ByteDance needed to partner with a US technology company to help resolve a national security review into its ownership of the app, and is said to have began with a deal that would see the tech titan hold a minority stake in exchange for using the Microsoft Azure cloud.
As political pressures mounted, however, the potential deal became less about the traditional terms of an acquisition, such as price, with Microsoft and TikTok instead exploring multiple potential arrangements that could help a bid pass muster with the White House, per a person familiar with the matter whose identity is known to Business Insider.
Wedbush Securities analyst Dan Ives believes the nail in the coffin for Microsoft’s deal was when the Chinese government revised export rules to give it approval over sales of technologies including code for making personalized recommendations, such as TikTok’s prized video feed algorithm.
“Microsoft was only going to acquire TikTok if the algorithm and the source code was part of the deal,” Ives told Business Insider. “Once the export rules changed, it was essentially a poison pill for the deal. [Microsoft CEO Satya] Nadella never wanted that deal.”
Where does Microsoft go from here?
Microsoft’s TikTok bid came as a surprise because it seemed to have little to do with the company’s existing business, which largely focuses on cloud computing and enterprise software.
There are many theories about why Microsoft wanted to acquire TikTok, but little is known about what exactly Microsoft planned to do with the app and where it would have fit into the company.
What is clear from the ordeal, Ives said, is that Microsoft is looking for its next big play.
Microsoft’s enterprise software and cloud computing businesses are performing well, and while the company has taken recent steps to cut its losses in some areas and prioritize its strengths, the TikTok bid shows Microsoft has an appetite for a consumer acquisition.
“Microsoft has significant deal prospects on the horizon,” Ives …read more
Source:: Business Insider