Alphabet Inc (NASDAQ:GOOG) could challenge Microsoft Corporation (NASDAQ: MSFT) in race to acquire TikTok
TikTok is up for grabs after President Trump signed an executive order that ends its operations in the U.S if a U.S company does not acquire it. Alphabet Inc (NASDAQ:GOOG) has also been fronted as a possible bidder to take on Microsoft Corporation (NASDAQ:MSFT) in the race to take over TikTok.
According to analysts, Google’s acquisition of TikTok will be a strong shot to take on social media giants like Facebook and Twitter. This is because TikTok boasts of a large and well-engaged audience.
What Google stands to get from TikTok
TikTok brings on board a young, creative, and highly engaged audience. Much of this audience could already be using Google, but the acquisition could allow the tech giant to leverage the app to draw its audience deeper into its ecosystem.
In addition to YouTube, Google could further leverage TikTok’s videos to boosts its ads revenue. Research shows that video ads are the fastest-growing ad segment. Therefore, it is possible that the acquisition of TikTok could help accelerate revenue growth thanks to the young and engaged audience.
Additionally, TikTok is a big customer of Google’s Cloud business, having spent more than $800 million in cloud services in 2019 alone. With already business in place, the two companies could integrate much easier.
Microsoft in talks with TikTok
Microsoft is in advanced talks to take over the social media app. Last week, President Trump signed an executive outlawing ByteDance’ TikTok’s parent company’s activities in the U.S in the next 45 days. The government cited national security threat as the main reason for banning the app in the U.S. The app has been growing in audience, especially the young people, and its Chinese ownership has caused security concerns in the U.S.
Microsoft says it has resumed talks after the company’s CEO Satya Nadella had talks with Trump ahead of the extension of the negotiation period. The software giant says it is committed to acquiring the social media app subject to complete security and assessing the economic impact of the deal.