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TikTok Deal Could challenge Light Touch on Acquisitions by Microsoft CEO
Well, for Microsoft Corp. The acquisition of the US TikTok business can present a new challenge, Chief Executive Officer Satya Nadella: how to quickly reshape a just picked company without damaging the successful form.
Mr. Nadella has typically taken a light-touch approach to Microsoft 's biggest acquisitions. Following the $26 billion shelled by the software giant for LinkedIn in 2016, it took years to integrate the company, partly to prevent disruptions to the culture which made a networking company a success.
Mr Nadella said at the time of takeover, That is not about changing LinkedIn 's core.
Two years later he repeated the strategy with the $7.5 billion acquisition of the GitHub Inc development partnership platform.
However, adhering to this script with TikTok could be more difficult if, at the pressure of the Trump administration, Microsoft tries to purchase parts of the vine-sharing application from the Beijing parent ByteDance Ltd ..
President Trump signed last week a management order to take effect in September and effectively ban American transactions, including downloads of an app, with the owner of TikTok, except for the United States company to be selling.
TikTok poses a threat to US interests in terms of economic and national security. It raises such a risk and TikTok disputes that it would challenge the order.
Microsoft promised to address the security issues of the United States government and ensure data on over 100 million American users were only available in the United States. This is a difference from typical approaches for Microsoft to integrate slowly, says Robert Majek, a Raymond James & Associates research analyst.
What I believe Microsoft is going to do with TikTok is to throw as much resources as possible in order to get them up and then get out, he said.
Industry officials said Microsoft or any other buyer would have to rewrite the TikTok software to ensure that people who work on the past app operations could not access U.S. data to address US security problems.
Josh Hawley, Republican Senator of Missouri urged Microsoft not to rely on employees of ByteDance that may be affiliated to the Chinese Communist Party in transitions to express concern that they might add backdoors to access information. TikTok said that American user data would never be shared by Chinese authorities.
The agreement, which also includes TikTok operations in Australia, Canadian and NZ, has been agreed by Microsoft in mid- September.
He refused to discuss how the company could be integrated. Mr. Trump also told a buyer that all TikTok could acquire. Microsoft did not say whether a full purchase would be considered.
It could be uncomfortable to change its takeover approach for Microsoft, as it struggled with acquisitions before Mr. Nadella became CEO in 2014. In 2013 , the company spent 7.2 billion dollars on the mobile company of Nokia Corp., only two years later to take a $7.6 billion writeoff from the deal. Likewise, Microsoft shelled off almost the entire value five years later when it bought a Quantive advertising-technology company for $6.3 billion in 2007.
Mr. Nadella used LinkedIn to adopt a hands-on approach to business integration. Microsoft began to move LinkedIn to its cloud only last year, and Mr. Nadella is still reported directly by Linkedins CEO. The integration was so light that the personnel of LinkedIn seldom noticed that they were part of a Tech giant.
Initially, LinkedIn and Microsoft mainly integrated their systems on the surface , allowing LinkedIn profile information to be displayed in Microsoft Office 365 applications like emails.
These features were possible even if LinkedIn hadn't been purchased by Microsoft, says Rob Helm, an analyst at Microsoft Management, an advisory firm helping businesses to integrate with software giant 's products.
The successful strategy of hands-off take-over. Although some analypsts questioned whether Microsoft maximized the value of those procurements, LinkedIn and GitHub recorded strong user growth.
The network had 433 million registered users with growth slowing when Microsoft acquired LinkedIn. Microsoft said LinkedIn had over 706 million users in the last trimester, and since the purchase it has seen sales roughly double.
GitHub, which now reports to the cloud computing group of Microsoft, increased user numbers by 28 million to over 50 million when it was acquired.
Alex Zukin, an analyst at RBC Capital Markets, said "An absolute key lesson from the acquisitions LinkedIn and GitHub is that it must remain alone. "To maintain and support the team together, but let it run for at least one or two years. Don't do anything that might threaten this.
The expertise with LinkedIn has also shown how Microsoft was able with Beijing to deal with political issues — a area which is again highlighted by the poor reception of U.S. pressure to force TikTok to sell in China.
Microsoft has permitted the censorship of some of the LinkedIn contents and the Bing search engine to address local problems in China.
However, some did not make the most of Mr. Nadella 's approach by buying companies.
"The value of LinkedIn was not fully realized," said Ray Wang, founder of Constellation Research Inc., Silicon Valley consulting firm. "LinkedIn alone is great, yet Microsoft does not seem to know how to use it except to sell ads."
