TikTok app on a phone
PHOTO: Kon Karampelas

When it came to analytics services, I wrote off Microsoft long ago. At the time it was vying with Google for internet supremacy among consumers, as an attempted extension of its ubiquitous operating software, Windows.

 

Time has passed. And while Windows is still around, Google's runaway success with its Google Analytics platform, combined with its domination in online search, made Bing a far distant second place choice for consumers. It also created a barrier for Microsoft to launch an analytics product, a natural complement of search and digital ads. Even Adobe leapfrogged into a competitive marketplace position, seemingly sealing Microsofts analytics fate when it acquired Omniture back in 2009. 

But Microsoft’s analytics fate only appeared to be sealed. The company has gone through a savvy business pivot in the intervening years that has proven me wrong.

Like the technology behind analytics, Microsoft’s innovation strategy has evolved. Web analytics has evolved into digital analytics, incorporating more data from varies sources than that from just a website. Data generated from apps, chatbots, and cloud solutions introduced a way for Microsoft to iterate on its database solutions its business customers are already well-familiar with.

Microsoft has proven a fierce competitor against Google in machine learning, a much fiercer competitor than it was for search engines (Bing), paid search ads, and browsers (Internet Explorer, now being replaced by Edge). Microsoft made Azure machine learning and cloud services a success. Now the company is eyeing an acquisition of TikTok's American possessions. Such a buy would extend its success and potentially reset Microsoft's social media presence. It also could open the company to risk it doesn't currently face.

Where Microsoft Stands Now in the Analytics Field

Microsoft now finds itself well-positioned to serve its customers who had previously used its products for data management and cloud services separately. Investments into Azure as an integrated platform have made it possible for Microsoft to provide a unified experience as an on-demand access for data. Its platform options could further tailor features according to the technical abilities of the user. Power BI is the best example here, giving advanced data visualization capabilities to users. For another example, Visual Studio Code allows an extension to deploy debugged programming into Azure, an aid for developers and analysts building pipelines for data models. Microsoft's strategy to bridge data management and user activities is proving to be a valuable evolution of its brand. 

Microsoft found it could also leverage its acquisitions and investments to extend customer segments different from its traditional customer base — office software users. Its investment in GitHub, for example, improved its standing among developers. That developer interest provides a strategic advantage, encouraging new users to potentially adopt Azure for data science projects or to use Visual Studio Code for building apps and software. Managing a business-oriented presence through its investment in LinkedIn has allowed Microsoft to focus on its cloud services and brand messaging to the business community.

Related Article: Microsoft's GitHub Buy Reflects Its Evolution

Where Does TikTok Fit in the Microsoft Ecosystem?

A TikTok acquisition would give Microsoft access to an audience marketers covet: Gen Z adults. With the right effort, Microsoft can reinvigorate its advertising platforms for large brands and small businesses based on this audience. It would also have gained a complementary audience for other segments. 

For example, Microsoft could open up the TikTok API for developers to create craft apps and games. It could also develop an ecosystem of supporting services, ranging from a cooperation with LinkedIn to a video analytics provider. 

Microsoft has previously only dipped its toe into the mainstream social media waters: it owns a 1.6% investment stake in Facebook and acquired LinkedIn as a subsidiary in 2016. 

Adding TikTok would also give Microsoft another proving ground for its unified cloud services. An acquisition would give the company access to TikTok’s algorithm, giving it a chance to apply its own prescriptive analytics through a variety of Azure cloud services. Potential outcomes include offering music recommendations for a dance video, suggesting TikTok users to connect with or the creation of an internal analytics service to prevent the spread of deepfake videos. Managing how to serve such content on TikTok could further the profile for Microsoft services overall.

Related Article: The Role of Data in Microsoft's TikTok Ambitions

Risks of TikTok Acquisition

But as with any acquisition, there are risks. The greatest risk may be ongoing scrutiny. Microsoft has been able to flourish, dodging many controversies since the antitrust inquiries of the late '90s and early aughts. The CEOs for Facebook, Amazon, Google and Apple appeared before a US congressional antitrust hearing earlier this summer, but Microsoft CEO Satya Nadella was not called on to testify.    

Ownership of TikTok would open Microsoft up to the controversies that have plagued other social media platforms: data privacy, advertising boycotts and misinformation campaigns. Even if the high-profile political posturing over TikTok’s association with the Chinese government died down, ongoing scrutiny may become a sustained distraction, dragging resources away from development.

Microsoft certainly has capacity for managing distractions as Amazon and Google have done. But social media companies face continued negative public perception. A Pew Research report found US citizens believe social media have too much political influence and do too little to stop misuse of their platforms. While Microsoft’s ownership of LinkedIn has not led to a platform controversy due to the professional tone of the platform, TikTok is a different story. Microsoft would then run the risk of a domino effect should the platform be exposed to a widespread crisis, such as Cambridge Analytica using Facebook profile data without user permission. 

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What Would Be the Long-Term Impact of a TikTok Buy?

A TikTok deal is by no means assured. Rumors have surfaced that Oracle, Twitter and others want the platform. Meanwhile, Microsoft continues to be a textbook study of business intelligence success — Gartner selected Microsoft as a Magic Quadrant Leader in analytics and business intelligence platforms for 13 consecutive years. 

A TikTok acquisition would change the equation to that success in intriguing ways. Whether good or bad, such an acquisition would certainly have a lasting impact on the assets Microsoft has now.