Might Microsoft Make Another Run at TikTok?

The tok keeps tiking... In just over a month, on January 19, TikTok will be banned in the US. Unless ByteDance finds a suitable US suitor for the service first. But that seems pretty much impossible in such a short timeframe. And so the company and service has to hope that a court is willing to put a temporary freeze on the law, perhaps pending a Supreme Court review. Or, you know, the person getting sworn into office the day after the ban...

Everyone assumes that Donald Trump will do something to save TikTok because he said he would at various points on the campaign trail. But that was also clearly a way to get votes from young people (and perhaps to keep some donors happy). Trump says a lot of things and then does the opposite. Like, you know, when he was the one who set the whole banning-of-TikTok thing in motion.

If I'm ByteDance, I'm not relying on anything that was said. If nothing else, Trump is going to use TikTok as a point of leverage in trade negotiations with China. That's what he does.

So TikTok is going to have to get creative here if they actually want to survive. And actually, there's a party that perhaps can serve up a win/win for almost everyone. It's the same company that tried to buy TikTok the last time around...

Yes, here I am spending Microsoft's money. Yes, again. But this time, Microsoft actually tried to buy the company once before! Their bid to buy TikTok during the pandemic was hasty, conflicted, chaotic, and just weird. This time there may be pieces in place for it to actually make sense.

First and foremost, Microsoft needs a consumer win. Try as they might with the OpenAI partnership, they just can't seem to buy a consumer hit, quite literally. So now they're trying with more AI products outside of that partnership. And it still doesn't appear to be going anywhere. You know what could help? A service with over a billion users. Imagine plugging your AI into that?

And actually, Washington might like that more than ByteDance continuing to own the property and piping in their own AI to those users. Yes, it's different AI than what users in China are getting, apparently. But to say this is all a blackbox is an understatement. As uncomfortable as the government has been with a Chinese company owning TikTok for propaganda and data reasons, just imagine when you add AI into this mix... You have to believe that even the Trump administration is going to want a US owner involved in that layer, if nothing else.

China doesn't want to see such a sale, of course. Which is the single biggest blocker in any deal. But perhaps the government could convince them with said trade talks. You give us TikTok, we'll ease on a few tariffs. That kind of thing. Why do that? Optically, it would be a big win for Trump early in his new term – the President who saved TikTok! It's harder to see from China's perspective, but again, this is what Trump does: bargains, on everything. Maybe China ultimately decides to take a trade rather than just fully shut down a crown jewel of technology that tackled the Western world...

And Microsoft is no stranger to deals done alongside – and perhaps at the behest of – the US government. The recent G42 deal is the best example of that. Microsoft is helping the government move the UAE away from China's tech. A trusted partner – even if complicated – in this regard could yield a second deal. And while it might be a headache to Microsoft, perhaps it buys some goodwill on the antitrust front as well. Not explicitly, of course.

Have I mentioned that TikTok is not just working with Microsoft already, but is the largest buyer of OpenAI models as sold through Microsoft? Again, this is all sorts of messy. But what would make it less messy is Microsoft becoming the primary shareholder of TikTok.

That's another thing: Microsoft may not have to buy the company in full. They may just need to buy enough to push ByteDance's share below a controlling threshold. And if the company determines that Microsoft can boost that value and/or that such a structure is certainly better than going to $0, you can make a case...

There are all sorts of wildcards and hurdles in the above ideas. Still, at the highest-level, it would seemingly make the most sense for all of the parties involved. Oracle might want a say in that, given their deal already in place to secure TikTok's US data, but it would be an overall better fit with Microsoft. Perhaps Oracle could be the second largest shareholder, easing some of Microsoft's financial burdens in such a deal and promising to keep some level of the Oracle cloud in use (and perhaps trading some NVIDIA GPUs while they're at it).

I still like my Intel idea for Microsoft more. But TikTok is in an even more precarious situation at the moment. They're running out of time. The white flag is about to come out. Where's the white knight?