News August 11, 2020

TikTok & Twitter hold talks about a potential team-up [report]

TikTok & Twitter hold talks about a potential team-up [report]

and have had preliminary talks about “a potential combination”, in the US at least, says a report in the Wall Street Journal.

The WSJ cited people familiar with the matter and admitted that a team-up “would face significant challenges,” including whether Twitter would be able to outbid Microsoft.

It’s estimated that Microsoft has $136 billion in cash reserves while Twitter has $7.8 billion. 

In terms of market cap, Twitter’s is around $29 billion and Microsoft’s is sitting at $1.6 trillion.

The other concern is if a deal can be struck by September 15, President Trump’s deadline for all US companies to stop doing business with the Chinese company over security concerns.

TikTok parent Bytedance has consistently denied such concerns, and threatened to launch legal action “shocked” by the executive decree.

TikTok has nearly 80 million users in the US, while Twitter was recently reported to have 48 million active users.

Both the deep-pocketed Apple and Facebook have confirmed they’re not interested in buying the app after media reports implied they might.

Netflix is also mooted as a dark horse suitor.

Communications expert Sharon Koh told BBC News, “Even if the deal goes through, be it Microsoft or Twitter taking a substantial stake in TikTok, what remains to be seen is how both parties are going to move forward operationally.”

“It will also take a tumultuous effort for both organisations to meander through the political sensitivities.”

Microsoft, for instance, would have to build in privacy protection into the TikTok technology and would ask for a year’s grace (or two or three, even) for its engineers to do so.

Given some of Microsoft’s spectacular consumer tech failures – Groove Music service, the Zune MP3 and the Windows phone – would they end up with a dud that TikTok’s current 800 million global users will discard in a hurry?

Related articles