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Comment by rich_sasha | Hacker News Reader

From the other thread:

Why is suddenly everyone so keen to buy TikTok? And why such bizarre buyers - Microsoft, Oracle, now Walmart? None of these are companies I would associate with a social media presence. Their business is generally the "boring" - office application, data munging, groceries.

Microsoft did buy LinkedIn and Skype, they don't seem in any way integrated in what it does (in fact, doesn't Microsoft undercut its own Skype app with Microsoft Teams?). And, this is opinion-based, but from a technical point of view, they seem very inferior to comparable non-Microsoft products (Zoom, Facebook etc.).

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The Chinese version of TikTok is very integrated with their own eCommerce platform. A video creator can link in the video the cloth they are wearing, the product they are using, or the hotel they are staying at. Also the live stream part in the Chinese version is hugely successful with selling products (think of it as QVC + Amazon). So I'm sure Walmart saw the potential as part of of their eCommerce strategy for the younger generation.

That does make sense, thanks.

Wow this makes way more sense now. Was so puzzled to see Walmart jumping in on this, now it seems obvious.

It's also important to note that TikTok is one of the first platforms where young people expect the platform to curate globally-trending content for them. This is a stark contrast to the algorithm-driven news feeds and hands-off trending-sections of most other social media, and it opens the doors to thinking about TikTok the way one would think about a traditional media and advertising play, albeit one executed with significantly more sh$tposting. MSFT, especially post-Ballmer, is full of smart and agile-minded and empowered people who can understand this.

I'm not sure I follow, isn't TikTok curated via algorithms as well? The content you like influences the content you see next. How's that new?

Whatever the curation algorithm in Tiktok is, it is so much better than Youtube or Instagram. One actually feels that they are a part of a movement bigger than themselves and something that is globally trending.

Tiktok is a revolutionary social media application. They did what twitter couldn't do with vine.

I think the poster meant how you create a TikTok not to follow your friends, but to follow creators.

Following creators is something that emerged out of Instagram organically. You first logged in because you wanted to see what your friends were up to.

In contrast, following friends was likely not your original reason for joining TikTok - it was to find interesting content.

An ad from a "creator" in your Instagram feed might evoke stronger resistance than in your TikTok feed.

This is an interesting premise. And it makes TikTok (and Douyin) possibly even more valuable.

Someone like Walmart (or Amazon), that sells millions of items, can tap into the mass Chinese market of 1.4 billion people that are coming online and entering the middle class.

This can easily be Walmart’s ace to finally challenge Amazon domestically and worldwide.

In that case, I suggest TikTok refuse to sell out, at fire sale prices. They can make more money themselves.

Just take the American ban. And wait out Trump. If Biden wins, and he still enforces the ban, then it’s the American market that will lose out. Think of it, all those teenagers that are hitting the TikTok lottery, with their videos that go viral, and TikTok is sharing in the proceeds with them.

The young adult market, should realize what is happening and vote out Trump. This can at least send a message to the establishment.

Admittedly, the rumors that teenagers used TikTok to register for tickets to Trump’s rally, only to not show up, is rather hilarious. And he got bitter and butt-hurt for it. But couldn’t they have also spread that message around on other forums like Twitter or Instagram or Facebook too? So I don’t see why TikTok got singled out for it.

I'm betting that Verizon is going to be next in line. They've been acquiring content companies for quite a while now- the remnants of AOL and Yahoo. They seem to be a good choice as far as strange buyers go.

Highly doubt it. Literally all of the Verizon execs who were deeply involved in those acquisitions are long gone. The integration of Yahoo was pretty horrendous in execution, even by large corp M&A standards, which is a low bar.

Verizon sold Tumblr for nothing. They’ve written down the majority of AOL and Yahoo. That attempt of theirs is a failure and Verizon for now has moved on.

Other companies have had similar fates with trying to make media content mini-empires.

Almost all of these bad decision are with hindsight. Though some may be more obvious - CBS paid too much for Last.FM and CNET’s network of sites that at one point extended pretty far. - Fox paid too much for MySpace and IGN Whose smaller network of sites extended pretty far too before. Fox sold both off for fractions of their purchase costs. - NYTimes sold off About.com and didn’t do too much with their other small attempts.

—-

- IAC is the most successful, but they spin off most of their best stuff and so the actual main companies market valuation isn’t too high. Though the not too long ago spun off Match has a higher market cap.

Amazon is fairly successful though how much that has to do with Amazon doing well as well can be debated. They did some ruthless stuff like Diapers.com. IMDB, Box Office Mojo, Goodreads, Twitch, and one or two other purchases have worked out well enough

Comcast’s very small web media sites have fared well enough too until covid hit. Their Fandango umbrella of sites including Rotten tomatoes was doing well.

—

It’s hard to break into the web in a big way. Especially with being content centric or with niche social media sites.

There is a domestic political side to this. The president has stated that he wants TikTok sold. Even if these companies never buy anything, the fact that they are participating in the negotiation, or at least making public statements in support of an eventual sale, wins them favor with the president.

Microsoft own Xbox, MSN (MSN Games) and the Microsoft Store so at least they've a foot in the door when it comes to entertainment.

Oracle/Walmart though? Doesn't make much sense... Especially Oracle.

At the level of dollars being discussed, there's a strategic benefit to engaging in negotiations just to force the counter-party to raise their bid or force concessions. For example, it's suspected that Google famously did this against Verizon for the FCC Spectrum licensing [1].

So take Walmart: If they believed there's a 10% chance that Amazon might join the fray (to target younger demographics), then there's a good game-theoretic argument that Walmart should be at the negotiating table too.

[1] https://www.cnet.com/news/spectrum-auction-google-wins-by-lo...

Forgetting their access to extremely cheap debt, MSFT has $140bn in cash which they need to use to return as much value to shareholders as possible. They can spend 30% or so of their cash to aggressively enter a fast growing trillion+ dollar market, with a service that has the potential to take a chunk of out FB. And it pushes them in to closer proximity to commerce. From a return to shareholders perspective, I don't really see why MSFT wouldn't at least seriously entertain this. It's not every day a non-US product scares the hell out of US social media giants and then gets dropped in your lap due to a forced sale. Especially when they were willing to pay $25bn+ for LinkedIn.

Then you have AMZN becoming 3rd largest online ad service, and WMT sees another area in which they'll get crushed by Bezos. They get access to the advertising side via Tik Tok, and can rely on MSFT's team's to help them avoid screwing up the product.

>None of these are companies I would associate with a social media presence

This is exactly why. They see TT as the "new" form of social media, since everyone is sick of FB-style feeds and profiles, and want a piece of the action. TT's growth and young userbase demonstrates pretty clearly that traditional social media isn't cool anymore.

Maybe. The sort of 'I see cool kids have skateboards so I'll get one too'. But surely this is backwards.

I guess when you are bidding against other people, the highest bidder wins. That means you have to, in a way, overpay for the product, and reap some special synergy bonus that other buyers can't get. This is what is missing to me, I can't see how owning a social media app enhances the rest of the business for either of Microsoft, Oracle, or indeed Walmart.

Optimistically, you could also be betting that everyone else is still underpricing the product.

The problem with trying to buy a business like TikTok at its prime is that it's trying to buy "cool". It's the most perishable commodity imaginable.

Let's assume that you manage to skate by the initial purchase process intact-- that the audience doesn't revolt en masse and say "I don't want to be associated with Walmart/Microsoft/Oracle". In a way, a unfamiliar foreign owner has a bit of mystique-- everyone in the target demographic has been in a Walmart or dealt with a Windows PC, so those brands have baggage already, whereas this was most people's first contact with ByteDance.

A lot of the potential 'synergy bonus' opportunities have to be intentionally slow-walked to avoid setting off the audience's spider-sense. Push "buy goods via TikTok" too hard, or push the wrong ad inventory because it's all you have, and users will walk away.

But as soon as a Walmart or Oracle buys TT it won't be cool anymore either.

Doubtful many users of TT would notice or know enough about Oracle etc to care.

Oracle would strangle it to death. Walmart would ignore it to death.

It took forever for more than the HN crowd of people to remember that Facebook owns IG and Whatsapp. Parent company isn’t that important. Fox buying MySpace and Fox’s brand weren’t what hurt MySpace.

Microsoft makes lots of sense. They own Minecraft and Xbox Live. Both highly social products and roughly the same demographic as Tiktok. Both have tens of millions of young teen users. Tiktok is the perfect complement.

I bet the people who use TikTok haven't even heard of Oracle.

I'm still not sure how Oracle makes money with so many cloud options in the market right now.

>Microsoft did buy LinkedIn and Skype, they don't seem in any way integrated in what it does (in fact, doesn't Microsoft undercut its own Skype app with Microsoft Teams?).

Microsoft has LinkedIn loosely tied to other Office 365 products now. When you hoover over a name, it'll show you whether the person is on LinkedIn, or that they have _x_ possible matches.

They also have a resume assistant integrated to Word, and have some data linking to LinkedIn if you so choose.

It was certainly an expensive purchase, but the premium tools and access to employee information may have also been valuable in terms of benchmarking objectively how good an employee's background is for a job or compared to their peers. I don't know how powerful the employer side of LinkedIn is for this type of work.

> why such bizarre buyers

I doubt every party talking about buying TikTok is interested in buying TikTok.

If I were a product manager at a large-ish company even remotely related to video or social media, I'd be bugging my PR team to put out such a release.

Hmm, dunno. Maybe. But I look at the current line-up of buyers, and I think they are just making themselves look silly. I can't see the benefit in even bidding, for these guys.

They want the data.

"MMMM that sweet, sweet user data mmmm yummmmyyy" - said some corporate middle manager at ${megaTechCorp}.

Especially young people. Corporate America can't figure out young people.

Of course whether or not that data can be successfully leveraged into profits is another story.

Walmart is a mega tech corp?

I think Walmart is making an honest investment in tech. They have some solid open source tools (Hapi.js, Electrode) and they have Walmart Labs / Kosmix.

Now potentially acquiring tiktok.

Walmart also purchased Jet.com and Bonobos. They're catching up to Amazon, and even beating them in some ways (their pickup/delivery service has way more inventory than AmazonFresh).

Tik Tok is the only way for MS to get big data from the social side.

Besides they can integrate it into their many platforms, XBox, Bing, Windows (Windows is still the preferred streaming platform, for example), etc.

However, seeing the other bizarre collection of companies getting into this fight, Oracle, and Walmart, I have a feeling this is more of a play towards getting into the Chinese governments good graces. I’d be interested to see if after paying a premium to buy Tik Tok, if the purchaser starts getting a higher share of China business.

If that is true, which I strongly suspect it is, or at least is a big part of this, then once again a thoughtless US action ends up giving China more leverage.

> Windows (Windows is still the preferred streaming platform, for example)

If Microsoft cared about that then why did they get rid of Mixer?

Agree, these buyers remind me of the Steve Buscemi meme where he has the backwards baseball hat and skateboard in tow, asking "How do you do fellow kids?". A really strange group that has no relation to social media at all. What is even stranger is the cost of tikTok should be exceedingly high(70B+), and would wreck the balance sheets of these companies if they do decide on a purchase.

Yes exactly, the price is astronomical, makes my intestines bleed just hearing it. Makes it all the more relevant to ask what's in it for these buyers.

Before all this kerfuffle, my money was on TikTok making facebook-level money in 5-10 years.

They still might, but it looks a lot less likely now.

Also, Microsoft seriously messed Skype up, multiple times.

Skype used to be the standard for video calls. These days I'm using FaceTime or Messenger.

What Microsoft did to Skype's UI/UX was nothing short of brtual dismemberment, which left me teaching my grandma to use FaceTime instead.

For shame.

All of them have one thing in common: they want to be seen as "new tech" companies, not dying older companies.

Microsoft wants to be seen up against apple, google Oracle wants to be seen up against AWS Walmart wants to be seen up against amazon e-commerce

From a shareholder management of company funds perspective, I think it's a stupid decision, but as executives within these companies looking to make a name for themselves, people advocate for stupid flashy acquisitions and imagine seamless synergies with ecommerce and advertising existing product lines.

In most cases, according to studies, large acquisitions seem to harm the company long-term.

Microsoft isn't "cool" anymore?

Everybody wants to get their hands on the data ("Data is the new oil").

Microsoft bought GitHub, Yammer, Minecraft too.

Microsoft has had various attempts at different social media, services, and more. They had a music streaming service, the shut down Twitch competitor. A few different social media sites like a photo and gif sharing site.

Microsoft seems like one of the best fits for TikTok when you consider the amount of money it will cost too.

Because Trump has ordered them to shut down if they aren't sold.

In the absence of any buyers that actually add value, and the fact that TikTok has no BATNA, this means it will almost certainly be sold below value.

Therefore, unlike most corporate acquisitions, this can be viewed as a pure "profit play", rather than relying on complicated synergies, economies of scale, fending off competition, etc. to justify the purchase.

In this light, the parent company doesn't really have to have anything in common with TikTok. It mostly comes down to which companies have a) the cash to purchase it, b) management that is smart enough not to mess it up, and c) the best use of the company's cash if the price is low enough.

In the end it will probably be purely a financial play, rather than the product/strategy play most acquisitions are. So the acquiring company just needs to be good at the basics of tech management. They just hire or keep on TikTok management that is good at the social media stuff.

This could be their entrance into the social media space, it is a profitable industry(in the billions of dollars), so why not? A company can have multiple strategic units.

TikTok is on Google Cloud. If it moved to Azure it would be one of its largest customers. This is why Microsoft wants a controlling interest but not to own it outright.

A bit off topic but I'm just curious, why TikTok (Chinese company) uses Google Cloud? AWS/Azure is operated in China (by local company) but Google Cloud isn't.

Because the product TikTok itself, is not targeted at users in China? TikTok is more like "Douyin International", or say, there is a separate "TikTok China" named Douyin. So whether these cloud services operates in China is irrelevant.

Its China version Douyin also uses a mix of Aliyun and their own infrastructure, so ByteDance likely have plenty of experience operating in multi/hybrid cloud environment.

I know that TikTok isn't operated in China but If I were TikTok dev, I'll think something like: adopt AWS/Azure to make possible to share code between Douyin and TikTok (just possibility, for future).

I also suspect that Google Cloud's learning resource in Chinese is fewer than AWS/Azure.

> Google Cloud's learning resource in Chinese is fewer than AWS/Azure

Yes, that's true. But it's not like there are a lot of learning resources in Chinese for AWS/Azure, either. At least compared to Aliyun (Alibaba Cloud). So likely it doesn't matter.

AWS is pretty much blocked in China, the China version and Azure's are what can best described as locally owned franchises.

Microsoft... because they want more clients for Azure (bonus: more ads business)

Oracle... Similar to Microsoft but reversed - they probably want the Ads/Data first

Walmart... ¯\_(ツ)_/¯

Microsoft wants the Azure business and was willing to purchase a percentage of TikTok to get it. My understanding is they are less interested in owning all of TikTok so partnering with Walmart who has been trying to increase their ad business over the last year makes sense.

> Microsoft... because they want more clients for Azure

Why spend 50B to buy it then? After owning them they'll be the ones paying for hosting costs.

IMO they want it for the same reason as Minecraft, a cultural phenomenon and access to its massive youth user base & their best chance to rival Facebook/IG.

Another commenter mentioned it already, but Walmart probably wants the direct access to another eCommerce channel.

There is precedence- or perhaps postcendence- of Walmart making this sort of purchase:

https://www.youtube.com/watch?v=mTxjdh2hI1o

My pet theory is that its because these are "old guard" enterprises who have a strong presence in Washington. TikTok's blood is in the water, and all of these companies realize that they could get it at a substantial discount thanks to US Government intervention.

For a minute (or forever, whatever suits you), operate on the assumption that Trump is an idiot, who doesn't actually understand the modern business landscape, let alone the modern tech business landscape. He believes Boeing is one of the greatest companies in the world [1], the DoD has a huge contract with Microsoft, the federal government is also rife with Oracle contracts, these "traditional" companies are the ones that our government interacts with on a daily basis.

On the flip side, they just had an antitrust hearing with Big Tech (and while Microsoft was there, they didn't get nearly the heat that Apple, Google, and Facebook did; I wonder why). In fact, many of these companies, and others in SV, have publicly disavowed the administration; some had representatives on high profile advisory panels at the beginning of the administration, but many have left.

Who is left talking to Washington? The old guard companies, who have big contracts, big traditional names, personal contacts scattered around the federal government.

I don't believe this has anything to do with cohesion with these companies existing business models. Look at your confusion about who's coming forward, and then recognize that if the world doesn't make sense, something else is going on that you're missing. Oracle doesn't want to integrate TikTok with Oracle Cloud: They want to use their contacts in the government to acquire it at a serious discount, then bleed it dry to remake the investment. Microsoft feels like the only exception I've seen: While it still doesn't make sense for them, they at-least dabble in social networking, they'd probably run it into the ground, but it wouldn't be malicious.

[1] https://www.cnn.com/2020/03/17/business/boeing-bailout-trump...

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