Business to robbery, Microsoft acquisition or government commision, where the TikTok episode goes
According to U.S. President Trump’s latest statement, there are only more than 40 days left for TikTok If Microsoft or other companies cannot reach a deal to acquire TikTok before September 15, this short video App under Bytedance will The US business was forcibly closed.
After US officials baselessly accused TikTok of the risk of data leakage and continued to pressure it, it was acquired by companies such as Microsoft, and it has almost become the only way for its US business to survive.
But this deal is not only as simple as tens of billions of dollars the US government deliberately “raises commissions” from it, and the competition and monopoly pattern of technology giants will also be rewritten.
How do “intermediaries” charge?
Trump pointed out that if Microsoft does acquire TikTok from ByteDance, in order for the transaction to pass, regardless of the purchase price, the US government “should get a large percentage of this price, because we make it possible.”
The president from a real estate developer further explained “It’s a bit like landlords and tenants. Without a lease, tenants have no value.” “We (the government) are leases to some extent. We make it possible to obtain such a huge amount. Success.”
In Trump’s words, the money Microsoft has to hand in is “key money.” According to investment terminology website Investopedia, this is equivalent to the handling fee or intermediary fee to be paid by the house hunter. It is legally compliant in many places, but in some cases it is also regarded as a bribe used to lock the house.
“This is a great asset,” Trump said of TikTok, “but unless it is approved by the government, it is not a great asset in the United States.”
The “Wall Street Journal” article believes that Trump’s views have some truth. If there is no pressure from the federal government, this potential acquisition would never happen. Regardless of the value of TikTok’s US business-considering that it will be blocked if it is not acquired, Microsoft is in an exceptionally advantageous position at the negotiating table.
For Trump himself, it is not uncommon for Trump to make a statement that exceeds the scope of the president’s power. For example, during the new crown epidemic, he claimed that he had the right to require states to reopen economic activities, but later abandoned this statement.
Gary Hufbauer, a senior researcher at the Peterson Institute for International Economics, said: “This is an extension of Trump’s view that he can micro-manage specific areas.” This makes Huffbauer Think of the medieval king who supervised salt, “If you want to mine some salt, put your money in the royal treasury.”
Even if the government has to pay a commission of 10%-or as high as $5 billion, this amount is not worth mentioning for the federal government with an annual budget of $4.8 trillion. But what needs to be vigilant is that this proposal will set a precedent for the US government to impose extra supervision on cross-border acquisitions, causing US companies to suffer additional losses.
Increase monopoly or competition?
In addition to commission income, the TikTok acquisition also made the US government’s attitude towards technology giants contradictory On the one hand, Congress wanted to crack down on the dominance of a few companies, while allowing another giant to strengthen its strength.
Last Wednesday (July 29), Amazon CEO Jeff Bezos, Apple CEO Tim Cook, Facebook founder Mark Zuckerberg and Google parent company Alphabet head Sundar Pichai via video The meeting was first investigated by the House Antitrust Committee on the same day.
That afternoon, Trump also tweeted to emphasize that if Congress cannot take action, he will use executive orders to resolve the monopoly status.
In the statements of technology companies, the rapid rise of TikTok just proved the fierce competition among giants. Its direct competitor, the social media giant Facebook, especially supports this view. If TikTok can attract 800 million users worldwide in just a few years, threatening the status of Facebook and Instagram, then US antitrust supervision is unnecessary.
Technology media Recode pointed out that Microsoft’s acquisition of TikTok will make antitrust review more difficult. Both Facebook and Google can argue that with the support of Microsoft, TikTok is now a bigger competitor to their business.
The TechCrunch article believes that Microsoft’s biggest goal is to reduce regulatory issues after the acquisition of TikTok. Therefore, according to Trump, offering a “reconciliation fine” to the US government in exchange for exemption from privacy and antitrust regulations will indeed be a very cost-effective deal.
Why is it Microsoft?
For Microsoft, TikTok, which has a large number of young users, can fill up its influence on ordinary consumers.
“Microsoft is a company we all know, but it is largely an enterprise software company,” said Rishi Jaluria, an analyst at financial services company Da Davidson. “TikTok can be a way for Microsoft to expand consumer influence and consumer business. the way.”
Raymond James&Associates analyst Robert Majek also said “If Microsoft can reach an agreement, this will undoubtedly be a huge victory.” He thinks TikTok will be a trophy.
Although Microsoft’s most well-known products are still the Windows operating system, Office office software and Azure cloud services, the technology giant has also completed many large-scale acquisitions in recent years.
According to Dealogic data, since the current Microsoft CEO Nadella took office in 2014, Microsoft has completed 161 transactions and spent approximately US$54 billion, including US$26 billion to acquire workplace website LinkedIn, and US$7.5 billion to acquire code hosting sites GitHub, 25 100 million US dollars to acquire the game “Minecraft” developer Mojang and others.
Compared with other potential competitors, Microsoft also clearly occupies an advantageous position in the acquisition of TikTok.
First of all, Microsoft, with a market capitalization of US$1.6 trillion, holds US$136 billion in cash and liquidity investments that can be converted into cash, and its strong financial resources are beyond the reach of most other technology companies. For example, Snap, which attracts young audiences like TikTok, has a market value of only $31 billion, which is not even as high as the $50 billion valuation of TikTok in a Reuters report.
Other Silicon Valley giants, such as Facebook, Google, and Apple, are currently facing antitrust investigations by the US Congress and have to proceed with caution. In contrast, Microsoft’s recent relationship with the US Congress has become more friendly. It just won a $10 billion cloud computing contract from the US Department of Defense in the second half of last year, disappointing rival Amazon.
Trump also changed his attitude on August 3 (Monday), saying that he was open to Microsoft or other US companies acquiring TikTok. However, he also revealed that Microsoft has to pay a large sum of money to the government “No one would think of this except me, but this is my idea. I think it is very fair.”