TikTok has proven to not just be all the rage among Gen Z but the cause of a great deal of rage. Concerns about the app delivering data to China have led to its ban in India and threats of a ban in other countries.
Among those is the United States, and the only way out may be a change of ownership form the popular app to remove it from Bytedance. Among the contenders for the takeover is Microsoft.
Investing expert and fintech entrepreneur, Dr. Richard Smith, shared some insight into the question of TikTok’s future takeover. In a series of questions and answers, he ascertained what, in fact, the app does and what value it holds for the company that acquires it. It certainly would be a boon to the company that acquires it.
As all apps collect some user data, why is TikTok singled out as a threat?
Smith explains that it wouldn’t be collecting data any more than other apps do. “The issue is that TikTok, being a China-based social media company, could be forced to share its data with the Chinese Communist Party. “
The concern stems from an observation that FBI Director, Christopher Wray, made at the beginning of this year: “It is public record that under Chinese cybersecurity law, Chinese companies like Huawei are required to provide, essentially, access upon demand with little to no process to challenge that.”
Smith referred to the India ban that extended to other Chinese apps with the claim that they were “stealing and surreptitiously transmitting users’ data in an unauthorized manner to servers which have locations outside India.”
The concern there, as in other countries, is “that social media data is a very powerful tool for behavior prediction and modification and that nation-states do have an interest in protecting their citizens against influence from competitive regimes.”
If TikTok refuses the deal, would it really lose its American audience the way the Indian ban forced users off there?
Smith is certain that it would: “If TikTok does not find a buyer then Trump will ban TikTok from the United States and content creators will be forced to move to other platforms.”
Certainly, some are hoping that will be the case, and a flurry of TikTok rivals have emerged from Facebook in the form of Reels and new offerings from YouTube, and even brand new kids on the block like Triller, an AI-driven music video and entertainment platform.
Is there a danger of losing the audience that has been built up for TikTok if the platform comes under Microsoft?
Smith doesn’t anticipate that users will defect if the platform is shifted to a new owner: “TikTok users obviously are not very concerned with privacy or politics. They just want their TikTok. As long as the new owner of TikTok leaves them alone and doesn’t mess up their fun, they will carry on.”
If anything, he believes that it will make Gen Z grateful to Microsoft “for saving their favorite platform.”
Another gain for Microsoft will be this: “Network effects are very hard to reproduce and the network effects of TikTok are already formidable.”
How far could Microsoft press that advantage? Could it become a serious rival to the likes of Facebook and YouTube with a roster of influencers?
Smith believes it can, and that the company intends to fully leverage that to advance its larger goals:
“With the acquisition of TikTok and its previous acquisition of LinkedIn, Microsoft will be a social media powerhouse. It’s clear that this is absolutely part of Microsoft’s long-term strategy. “
He went on to explain that the real value in social media lies in “the data that is generated by the consumers of social media.” Powerful corporations have built up their success on making use of “that data to better understand and target platform users with goods and services (including advertising).”
Admittedly, “Microsoft was late to this ‘surveillance capitalism’ party but catching up is a major part of CEO Satya Nadella’s long-term strategy.”
What TikTok represents to Microsoft is access to a huge number of subscribers who end up sharing a lot of information when they post, view, and share videos. He concludes with this observation on why it makes perfect sense for the name associated with software to get in on the social media trend:
“Microsoft needs to learn to dance and it’s asking the users of TikTok for help.”