Tuesday , November 24 2020

Go read this FT story about how Microsoft’s roots in China could help it acquire TikTok

Why, exactly, is Microsoft — purveyor of office software, cloud services, and high-end laptops — so well positioned to buy viral video app TikTok? We’ve previously looked at how the acquisition fits Microsoft’s future ambitions, but a new report from The Financial Times explains how the US tech giant has been preparing for this sort of deal for decades by nurturing connections with China’s tech elite.

As the FT explains, Microsoft has been involved in the Chinese tech world for far longer than many rivals. Its research labs in China have functioned as incubators for local talent from the 1990s onwards, and many top Chinese tech executives (including Zhang Yiming, founder of TikTok’s parent company ByteDance) have worked for the company in the past.

Yuan Yang, one of the article’s authors, noted on Twitter that this connection led the ByteDance founder to approach Microsoft after President Trump threatened to ban TikTok:

3/ Over two decades on, Microsoft has mentored and trained the talent behind China’s consumer tech explosion. That brought Bytedance founder Zhang Yiming to approach them once President Trump threatened to ban TikTok if it wasn’t sold to an American company.

“The soft power of Microsoft in China is immense,” one former Microsoft China executive, told the FT. “For the most part, Chinese employees leaving have a soft spot for Microsoft.”

Microsoft has also sweated hard to keep its software in use in China. About 90 percent of Chinese computers use Windows (even though piracy is rife), while Microsoft’s search engine Bing has survived in the country by censoring search results while others have been driven out. Microsoft-owned LinkedIn and GitHub are also operational in China, with the FT noting that these are two of only three major foreign-owned platforms that host user-generated content available in the country. The third is Amazon’s reviews system.

And this closeness extends to the political sphere, too. When Chinese President Xi Jinping visited America in 2015 to meet US tech CEOs at the US-China Internet Industry Forum, for example, it was Microsoft that hosted the event.

This sort of goodwill can’t be bought overnight, and could help Microsoft secure the acquisition of TikTok while avoiding Beijing’s anger. As another former Microsoft China executive told the FT: “All the pre-existing connections between ByteDance and Microsoft meant there were lines of trusted communications that could be taken advantage of.”

The deal to acquire TikTok is obviously still extremely provisional, and rests on the whims of a would-be autocratic leader who bristles at the idea of foreign interference: President Trump. But if you want to find out more about how Microsoft has been working on these relations for years, go read The Financial Times’ excellent report.

This Article was first published on theverge.com

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