A deal to buy the video streaming app TikTok, an idea President Trump is pushing for, would change all that, driving Microsoft into the kind of political minefield it has managed to avoid in recent years.
“Microsoft has happily stayed out of tech until now,” says Ashkhen Kazaryan, director of civil liberties at TechFreedom, a libertarian think tank in Washington. “If they get TikTok, that’s going to change.”
Four days after the bosses of Amazon.com, Apple, Facebook, and Google were criticized as “cyber-barons” in congressional hearings – the questioning of Microsoft was spared – the company said it was in talks to buy TikTok.
Like other social media companies, TikTok faces criticism that it has not done enough to combat harassment and hate speech. A purchase would be a major change for Microsoft, potentially exposing it to the kinds of concerns that have caused its rivals in trouble with lawmakers: privacy, misinformation, political debate, and child protection.
“Any company that voluntarily enlists in content moderation wars becomes insatiable for punishment,” says Nu Wexler, an independent communications consultant who has worked on Twitter, Facebook, and Google training executives on how to deal with it. Congress.
TikTok initially became a hit with teens posting silly videos, typically it was just seconds of themselves singing, dancing, and doing ‘something silly’, often challenging friends to respond with similar clips. As people around the world searched for ways to ease their boredom over this spring and summer’s lockdown, TikTok was inflated with a huge torrent of content.
That growth has brought scrutiny from US lawmakers who say ByteDance, which owns the service, maybe collecting US data on behalf of the Chinese government. This spring, Trump got involved, saying he wanted to restrict TikTok for security reasons and punish China for its handling of the coronavirus.
On August 6, Trump escalated his dispute with China, signing a pair of executive orders banning Americans from doing business with TikTok and the WeChat messaging service as of mid-September.
For TikTok, at least, there is a potential exit through a Microsoft deal. ByteDance has repeatedly denied allegations that it shares data with the Chinese government. But after it became clear that Trump was not going to back down, the company indicated that it may be open to selling some of its video services.
A purchase would lead Microsoft into the deceptive territory, as many users are children, sometimes dressing up or dancing provocatively or exchanging messages with adults without parental consent. And mixed with all the ridiculous are clips promoting dangerous COVID-19 conspiracy theories, angry nationalists about undocumented immigrants, or white supremacists calling for the murders of Jews and blacks.
In the second half of 2019, TikTok removed nearly 50 million videos that it deemed inappropriate, more than triple the number YouTube removed in the same period.
Last year, the U.S. Federal Trade Commission fined TikTok $ 5.7 million after determining that all personal information the app collected from children violated U.S. privacy laws. And now it is the subject of a new investigation by the FTC and the US Department of Justice into allegations that did not clean up its act, according to privacy advocates who say they have been interviewed by the agencies.
One such person, Josh Golin, executive director of the Campaign for a Commercial-Free Childhood, points out that Microsoft has been concerned with child safety since before, especially for the services on its Xbox game consoles. And the company in 2009 developed PhotoDNA, a web scanner that hunts photos and videos of child sexual abuse.
But the trust and security issues on TikTok go far beyond what Microsoft has faced in the past, says Golin. “It’s easier to get rid of these things early on,” he says. “When you inherit a site where those practices are already so ingrained, it is much more difficult.”
With $ 137 billion in the bank, Microsoft can easily afford a cash deal, according to Bloomberg Intelligence. But he’s wary of overpaying, especially since pressure from Trump makes TikTok look like a struggling asset. At the same time, Microsoft will want to avoid falling so low that China feels ripped off, according to a person familiar with the matter who asked not to be named by discussing internal deliberations.
Microsoft has a delicate relationship with China: Although some of its products have been banned and the mainland accounts for less than 2 percent of the company’s revenue, the government has allowed joint ventures selling the Xbox console and cloud services. Microsoft operates censored versions of LinkedIn and the Bing search engine, and since the 1990s it has had a research lab in Beijing, which now has more than 200 scientists. Critics, including White House trade adviser Peter Navarro, say all of that is evidence that Microsoft is soft on China.
Under discussion is an agreement in which Microsoft would own TikTok in the US, Canada, Australia, and New Zealand and ByteDance would take the rest, which would create a number of concerns about technology transfer and branding, according to the person familiar. with the thinking of the company. Closing the gap between two owners would make content moderation a huge headache, as the two parties could have vastly different views of what should be allowed or prohibited, the person says.
There are already multiple versions of TikTok for multiple regions, often using code from Musical.ly, a ByteDance app acquired in 2017. With ByteDance engineers in China still working on TikTok, it’s unclear how Microsoft could divide the code and the technology underlying to make sure it is free from Chinese interference.
Since Satya Nadella became Microsoft’s CEO in 2014, shares have increased fivefold and the company has returned to the ranks of the top tech powerhouses. But while Nadella’s strategy has been profitable, it has focused on relatively boring things like business applications and cloud computing, and other than the Xbox, there is little in the way of the consumer business.
Some past attempts to move beyond heavy corporate applications – Nokia and Skype come to mind – have been unmitigated disasters, leaving the impression that the company lacks the guts to succeed with consumers. TikTok could change that narrative, prompting executives to start exploring a purchase about a month ago, according to a person familiar with the situation.
Nadella has overseen three major acquisitions: the computer game Minecraft, LinkedIn, and GitHub, a collaboration platform for software developers. Each of them brought in large groups that Microsoft understood: gamers, white-collar workers, and coders, says S. Somasegar, a venture capitalist who worked at Microsoft for 27 years.The teens and young adults who make up the majority of TikTok users are a less obvious fit, though Somasegar says a deal could work. “Is it a risk? Absolutely,” he says. “But if you don’t take risks, you become a mediocre company.”