While we’re all waiting to see if Microsoft succeeds in striking a deal to buy TikTok, bam! Surprise! Another big tech company, although not nearly as big as Microsoft, has apparently entered the fray, saying that it too is interested in arguably one of the hottest apps currently on the market. That company is purportedly Twitter. Yes, the same company that, years ago, killed its own beloved short-form video app, Vine.
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The Wall Street Journal reports that Twitter has had “preliminary talks” about a potential merger with TikTok, specifically its U.S. division. The news is surprising, given that Twitter has a lot less financial muscle than Microsoft and would almost certainly need help from other investors if it were to make a bid for TikTok. Microsoft is interesting in acquiring not only TikTok’s U.S. business, but also its operations in Australia, Canada and New Zealand.
Per the Journal, although it’s not clear what the valuation of TikTok’s U.S. business could be, it could run into the tens of billions of dollars. Some analysts claim it is worth between $US20 ($28) and $US50 ($70) billion.
This is an important point given that Twitter’s market capitalisation is about $US29 ($41) billion. For comparison’s sake, Microsoft’s is more than $US1.6 ($2) trillion. In terms of cash and short-term investments, Twitter reported $US7.8 ($11) billion in June. Microsoft reported $US1.6 ($2) billion. Oh, and Twitter also lost $US1.23 ($2) billion in the latest quarter.
But Twitter doesn’t want you to focus on its finances. People familiar with the TikTok discussions at Twitter told the Journal that because it is much smaller, it would not face the same level of antitrust scrutiny as Microsoft or other potential bidders. Nonetheless, Reuters reports that one of Twitter’s shareholders, the private equity firm Silver Lake, is interested in helping fund a potential deal.
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In addition, since Twitter doesn’t operate in China — the government blocked it in 2009 — the company argues that its bid would not face any pressure from the country, according to Reuters.
The Journal reports that Microsoft, which has been negotiating for weeks with Bytedance, TikTok’s Chinese owner, is considered a front runner for any possible deal. Twitter is seen as a long-shot bidder because it is much smaller than Microsoft and would have a harder time paying for TikTok. Microsoft is also more advanced in negotiations.
It may seem ironic that Twitter, which shuttered Vine in 2017 as part of a cost-cutting restructuring effort, is now suddenly interested in TikTok. Part of its interest could be related to pure regret, especially after seeing TikTok thrive in a space Vine once dominated before it was overcome by Instagram and Snapchat.
TikTok only has a few weeks to find a buyer for its U.S. business because of recent actions by President Donald Trump against Bytedance. Trump and other federal officials claim that the Chinese government could use TikTok to spy on millions of U.S. users, an assertion that has never been proven and that TikTok denies.
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The president has given TikTok until Sept. 15 to find a buyer or face a ban in the country. However, to everyone’s eternal confusion, Trump apparently wants the U.S. to receive a substantial cut of any deal between Microsoft and Bytedance for TikTok, a demand that confounded legal experts and White House officials.