If Microsoft does end up buying video app TikTok, which is under threat of being banned in the US, it will mark a new tipping point in global trade and geopolitics.
US President Donald Trump, never a man to shy away from a baseless untruth or from smearing a public opponent, has threatened to ban the Chinese-owned social media app. This prompted an offer from Microsoft, the one tech giant excluded from last week’s blistering hearing into anti-competitive behaviour by Amazon, Apple, Facebook and Google.
Obviously, this latest irrational attack on the cause of a personal slight is classic Trump. He’s clearly still smarting from the deep humiliation teenagers on TikTok caused him when they booked over a million tickets to his first election rally since the Covid-19 pandemic struck. In the end, less than half of the 19,000-seater stadium in Tulsa was filled. It was a stunningly effective prank by a youthful age group seldom seen to care about politics. Covfefe.
Even if you overlook the backdrop of the ongoing Trumpian Trade War with China, it’s hard to disassociate this sudden attack on TikTok from that election rally embarrassment. However you look at it, it seems like an artificially induced fire sale in a larger global conflict that this popular short video app has found itself in the middle of.
In brief, TikTok is accused of potentially being able to provide data on its 100m American users back through its Chinese owner, ByteDance, to Beijing.
Originally named Musical.ly and then rebranded TikTok after its $1bn purchase in 2017, this latest social network star has given great cause for concern to Facebook, through Instagram, and Google, through YouTube.
Perennially worried about new upstart competition, tech firms tend to devour them – like an industry-wide form of killing your own offspring. It keeps the old kings from being challenged by any young pretenders. But with competition watchdogs breathing down their necks, as they have been in Washington and culminating with last week’s searing interrogations, none of the other so-called FAANG firms could buy them. It stands for Facebook, Amazon, Apple, Netflix and Google – the new controlling powers of our online world.
Enter Microsoft, whose Satya Nadella had a call with Trump on Sunday, and then announced his intention to purchase TikTok. On Monday, Trump gave them 45 days to conclude the deal, before the app is banned on 15 September.
“Microsoft is viewed as your grandpa’s company, and it is trying to change that,” Wedbush Securities MD Dan Ives told the New York Times. “Microsoft goes from an uncool company to many under 25 to potentially as hip as TikTok if they get this done.”
I disagree with these perennial suggestions that Microsoft is uncool. Sure, there was a time – when it tried to countermand the then flourishing iPod with a turd-brown coloured media player – when it was. But that is a long time ago.
Remember, Microsoft’s Xbox is one of the major gaming platforms in the world and remains a trailblazer in online gaming. The first major acquisition, for US$2.5bn, that Nadella did when he took over as CEO in 2014 was Minecraft, the outrageously cool game that is also a profoundly good problem-solving and skills-building app. Add to that LinkedIn (for $26.2bn in 2018) and GitHub (for $7.5bn in 2018), and Microsoft is an astute grandpa learning to break dance. Why not TikTok?
Should the TikTok purchase go through it will be the result of a strange brew of a looming antitrust campaign against the major online tech giants; and a petulant president (of the last remaining superpower of the Twentieth century) locked in a trade war with the new superpower of the 21st century (along with India). Previous wars have seen countries give up land and territory, but this is the first time in history where the spoils will be an app. Covfefe indeed.
This article first appeared in the Financial Mail.