There is news of short video platform Tik-Tok being sold. Microsoft’s Satya Nadella is close to the deal. There is a buzz that Tik-Tok is worth $ 50 billion, but Satya Nadella disagrees. He believe that this deal is like being under $ 50 billion. So there is still bargain in the deal, but the deal is also fixed. If this happens, it will be the biggest deal in the last ten years. Through this deal, Microsoft’s Satya Nadella will become King Menker.
Nadella has been doing deals on deals since becoming CEO
Within a year of becoming CEO in 2014, he bought the Swedish game company Minecraft. He later confirmed a $ 24 billion deal with professional-network site LinkedIn Corp. In fact, President Donald Trump has created a lot of problems in America regarding Tik-Tok. In such a situation, the only option in front of Tik-Tok is that they proceed with this deal. Tik-Tok has been banned by India, the second most populous country.
A total of 5-7 countries in the world have taken such a step. These are the countries where Tik-Tok has the highest user base. Therefore, there have been problems in front of Tik-Tok.
Time will tell what will happen next regarding Tik-Tok prices or deals. Some investors of its parent company ByteDance, however, consider the same deal size to be correct. They believe the valuation at $ 50 billion is correct.
However, Microsoft has made several deals in Nadella’s leadership and all have been successful. So there is no doubt about the deal of Tik-Tok. It may take time, but the bet is on Nadella’s hand. Microsoft architect Nadella, who moves from PC operating systems to cloud computing, is already overseeing some big deals.
Trump Administration Increases Problems of Tik-Tok
Indeed, ever since Trump suggested that he could ban Tik-Tok altogether, Microsoft has started showing interest in the matter. However, the idea of buying Tik-Tok from ByteDance or taking control of its US operation was initially pretty good on paper. But data privacy and China’s ownership structure did not address America’s concerns.
If Tik-Tok’s operation falls into the hands of a reliable, publicly listed US company, it could solve the data transparency issue.
Microsoft will also be Under Pressure due to Data Security
Microsoft must also be thinking about how it will protect users’ data. The company said that it will ensure that all personal data of Tik-Tok’s American users is securely transferred and will be safe. Any such data currently stored will be removed from servers placed abroad.
Microsoft will need to convince the US administration before the deal. In its statement to the US Treasury Department and the Committee on Foreign Investment, the company hinted at what aspect it was over-emphasizing, before mentioning ByteDance.
There is a Negative Atmosphere for Chinese Companies in America
Some US lawmakers are already on board. Lindsey Graham wrote on Twitter that win-win. His fellow Republican John Cornyn and others also appeared to support him. Democrat Senator Richard Blumenthal is among those who found that such transactions should not distract us from the need to crack down on fraudulent espionage and surveillance by Chinese companies.
With the Support of Washington, the Matter of Finalizing over Nadella
It is quite possible that some bankers and insiders of the ByteDance Company have leaked information and during this time some more potential buyers come forward and then a price war started. But with the kind of credibility and strategy that Microsoft has and the way Washington is supporting it, it seems that ByteDance has no more options left. Now, the responsibility of this deal is on Nadella of how soon he does it. Microsoft has said that it will resolve it by 15 September.
Now let’s see what’s for Sale
ByteDance had profits of $ 3 billion last year. Revenue was $ 17 billion. The entire company has at least 20 apps – including Doin (the local version of Tik-Tok). According to the information, Tik-Tok’s revenue last year was about $ 300 million globally. According to a report, this year Tik-Tok has targeted to raise $ 500 million through sales in the US. According to Microsoft, it is looking to buy operations in the US, Canada, Australia and New Zealand.
Annual Revenue Expected to be $ 70 Billion
By adding a little more in the three small markets, the annual revenue could be $ 700 million this year. It can also be a billion dollars. India and Britain were not mentioned in it. This is a significant omission. Given that, Britain is also a major security partner and much larger than both New Zealand and Australia. While India is the largest potential market for Tik-Tok, it was recently banned here after a border conflict with China.
Tik-Tok is Growing Rapidly
Facebook Inc. stock traded at 9.6 times sales and Twitter Inc. stock traded at 8.5 times sales. Undoubtedly Tik-Tok is growing more rapidly, but Snap Inc. had the same condition. This social media app made a splash in 2017. Snap is currently trading at 16.5 times sales and has yet to achieve an annual profit. The idea of buying Tik-Tok for $ 50 billion without building a presence in the UK, India or dozens of other emerging markets seems to be airborne.
Nadella will also see the Benefit of Share Holders
ByteDance should be sure that Nadella knows it too. It becomes their duty to buy Tik-Tok as low as possible before finalizing any deal for the benefit of the share holders. After convincing the regulators to complete the deal and remove barriers to the deal, Microsoft is expected to get a bigger discount in the deal. The size of this deal and discount will prove Nadella’s stature and will be remembered as the “Deal of the Decade”.