At first glance, a Microsoft acquisition of TikTok seems a little unusual. Microsoft has spent years walking back consumer plays like the Groove Music service, the Kinect Xbox accessory, its Microsoft Band fitness device, Windows Phone, and more recently the Mixer streaming service. Microsoft has been favoring its enterprise software and services, and even Cortana has transitioned to be productivity-focused. How does a service that caters to dancing teenagers fit with Microsoft’s buttoned-up business demographic?
If you dig a little deeper into Microsoft’s future ambitions, though, a move to acquire TikTok’s operations in the US, Canada, Australia, and New Zealand could benefit many of Microsoft’s existing businesses while also setting the company up as a real competitor to YouTube and Facebook.
Data, data, and more data
The key part of any TikTok deal will be the data and users Microsoft gains access to. This is the driving force behind concerns from the Trump administration over TikTok’s potential ties to the Chinese government and how that data might be misused. Microsoft acknowledges the data’s importance in its blog post confirming acquisition talks, noting that “Microsoft would ensure that all private data of TikTok’s American users is transferred to and remains in the United States.”
This data could be used by Microsoft in a variety of ways. The software giant has long used Xbox Live to fuel parts of Microsoft Research for future software and hardware projects, and the usage data helps game developers and Microsoft better understand how people use their Xbox. Understanding how people interacted with and used the Kinect accessory for the Xbox ultimately helped Microsoft develop and improve HoloLens, too.
TikTok could help correct a Microsoft blindspot and even influence how other software and services are developed inside the company. Microsoft has all the data it needs on business usage of software, but it hasn’t been successful with pure consumer services in recent years, which has left the company with a gap of insight into consumer behaviors.
That’s particularly relevant when you consider that a large number of young Americans are growing up in an environment dominated by Android, iOS, and Chromebooks in classrooms. With Gmail also dominating consumer email usage and document sharing through Google Docs, it’s possible to grow up in the US without needing any Microsoft software or services. Microsoft missed the mobile revolution and has been playing catch-up ever since, but it doesn’t want to miss an entire generation of future workers.
Microsoft could take advantage of that direct access to TikTok users with ads for Surface, Xbox, and other products, or even as another base for its game-streaming ambitions. Google is planning to leverage YouTube to integrate its Stadia streaming service, and TikTok would give Microsoft a response with xCloud game streaming. Microsoft had been planning to use Mixer for Xbox game streaming, but the service never gained enough traction, and the company was forced to strike a deal with Facebook for xCloud integration instead. It’s not hard to imagine watching a Call of Duty video on TikTok and then being able to click and instantly play the game as it streams to your phone via Microsoft’s xCloud service.
TikTok gives Microsoft a direct line to millions of youngsters using the app to watch videos and even those who use it to create content. Microsoft has tried desperately to adapt its Windows operating system to be more consumer-friendly with video creation apps, but TikTok offers an easy way for millions to create videos from their phones instead.