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Microsoft’s Move to Acquire TikTok is Part of a Larger Strategy to Bolster Their Cloud Hosting Offering

Written by Melissa Yap

It’s been a big year for Chinese social media company, TikTok – with a growing base of 100M users in the United States, $1 Billion in internal revenue forecasted this year and set to sextuple over the next. Microsoft have their eyes set on the prize, with plans to acquire the company despite the Trump administration’s (changing) plans to ban the app altogether. SteelHouse CEO Mark Douglas joined Ed Lee, Corporate Media reporter for the New York Times to discuss this latest update on CNBC’s Squawk Box program.

“Everyone thinks that Microsoft is interested in a social network. My opinion is that they’re bolstering Microsoft Azure, their cloud hosting division…this would be a proof point that they can host at the scale of Amazon AWS,” says Douglas. It is a move that is aligned with their overall strategy to beef up their portfolio, but it is also a move to grow their consumer presence.

Lee chimes in to provide his two cents about the plans for acquisition, “Data is the most important thing to Microsoft…it will help them with everything else in their line up. They want ‘in’ with the consumer game and to have something that will compete with Facebook and YouTube, Twitter and Snap. That’s where the growth comes from.”

But is the type of data on TikTok valuable? Unlike other social platforms, users aren’t expressing what they want or are interested in. It’s not the first time that Microsoft have made moves to acquire a social media platform, but this latest plan it consistent with their wider strategy to “compete with the credibility of Amazon AWS, which has Netflix as its largest customer as this is where the big profits are.” Douglas explains.