Microsoft nears big bet on TikTok

Microsoft nears big bet on TikTok
The US is effectively forcing TikTok’s Chinese parent, ByteDance, to sell by threatening to ban the app over security concerns. (Reuters)
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Updated 03 August 2020

Microsoft nears big bet on TikTok

Microsoft nears big bet on TikTok
  • Deal could help Microsoft build on its $27 billion purchase of job-search social network LinkedIn in 2016 to become a bigger player in internet advertising
  • TikTok has taken the world by storm, and emerged as a significant competitor to platforms like Facebook and YouTube

Microsoft has said its potential acquisition of short-form video app TikTok’s US, Canada, Australia and New Zealand operations could be completed by September.

The company set a provisional date of Sept. 15 for a move that carries myriad risks, and which would thrust the computer giant into the politically fraught social media business amid Sino-US tensions and increased scrutiny of big-tech companies.

The deal, though, could help Microsoft build on its $27 billion purchase of job-search social network LinkedIn in 2016 to become a bigger player in internet advertising, currently dominated by Facebook and Google.

Microsoft is likely to have an edge in pricing negotiations, as the US is effectively forcing TikTok’s Chinese parent, ByteDance, to sell by threatening to ban the app over security concerns.

TikTok has taken the world by storm, and emerged as a significant competitor to platforms like Facebook and YouTube. But like its rivals, TikTok faces substantial new costs for content moderation due to the spread of misinformation and allegations of political bias.

Increased oversight costs accounted for much of the 10 percent drop in gross profit margins for Facebook and Alphabet, Google’s parent company, over the last three and a half years, Refinitiv data showed.

“Does Microsoft really want to own an app that breeds conspiracy theories in tweens (teenagers and people in their twenties)?” said Hank Green, YouTube star and CEO of educational media company Complexly. He added that TikTok often removed content from its platform to maintain “a certain feel,” and could face public challenges over such decisions more often under a bigger name such as Microsoft.

At $1.55 trillion, Microsoft is the world’s second-largest company by market capitalization after Apple, but has in recent years faced less criticism than its peers over antitrust, data protection and China-based projects.

Microsoft has done several big deals since Satya Nadella became CEO in 2014, with acquisitions including LinkedIn and virtual world-building game Minecraft. They have fared better than those under predecessor Steve Ballmer, whose failed deals included Nokia Oyj’s phone business.

The LinkedIn acquisition, at 50 percent above its share price, was Nadella’s biggest and riskiest. Microsoft shares fell three percent when it was announced, with analysts expressing concern over slowing revenue growth and an expected cap on usage.

Some concerns may have been overblown. Microsoft has avoided antitrust and privacy scrutiny with a cautious approach to connecting LinkedIn to other products, such as Outlook, and analysts have largely viewed the deal as a success.

Though the coronavirus disease pandemic has slowed sales, LinkedIn advertising  revenue was among Microsoft’s fastest-growing over 2017-2019, as the global economy roared.

Overall, LinkedIn has generated $14.3 billion in revenue for Microsoft through ads and subscriptions, though analysts suggest it remains unprofitable.

TikTok is a bigger gamble, as it caters to a less-affluent audience than LinkedIn, where advertisers typically pay more to attract wealthier consumers. TikTok’s ad sales team and technology are also far less mature than LinkedIn’s were in 2016, and TikTok faces greater competition.

About 11 percent of US adults use TikTok at least once per week, versus 49 percent for YouTube and 62 percent for Facebook, a survey by tech consultancy Vorhaus Advisors showed last month.

LinkedIn came to Microsoft already 13 years old, with 11,000 employees and 105 million monthly users globally. Six-year-old TikTok, by contrast, has about 1,000 US employees and has been downloaded 226 million times in the four countries targeted by Microsoft’s deal, data from app tracker Sensor Tower suggested.

LinkedIn “was bought on domination of a sector, good revenue, and good margins,” said Mike Vorhaus, head of Vorhaus Advisors. “TikTok is going to be valued based on its incredible user growth and mobile advertising revenue opportunities.”

TikTok would make Microsoft relevant among both young engineers looking for a hip place to work and advertisers clamoring for alternatives to Facebook and Google.

YouTuber Green, said he doubted Microsoft ownership would hurt TikTok, noting he amassed 600,000 TikTok followers since he began posting a month ago.

“I don’t see anything at all standing in the way,” he said.


Cannes Lions completes jury presidents’ lineup for 2021

Cannes Lions completes jury presidents’ lineup for 2021
Updated 23 January 2021

Cannes Lions completes jury presidents’ lineup for 2021

Cannes Lions completes jury presidents’ lineup for 2021
  • “We know that after the postponement of last year’s awards, our jury presidents are eager to get going,” said Philip Thomas
  • This year, the jury president lineup is comprised of 57 percent women — the highest in the awards’ history

DUBAI: International advertising awards festival Cannes Lions has confirmed its jury president lineup for the awards scheduled to take place in June 2021.
Bozoma Saint John, global chief marketing officer at Netflix; Merlee Jayme, global president at Dentsu Mcgarrybowen; and Geoff Northcott, managing partner and chief experience officer at AKQA, complete the full line-up and join the jury presidents initially appointed for the 2020 awards.
“We know that after the postponement of last year’s awards, our jury presidents are eager to get going,” said Philip Thomas, chairman, Lions. “They will be leading juries in a unique year, awarding Lions for both 2020 and 2021 — no small job but one that will provide a crucial reflection and insight into the industry’s recent unprecedented journey.”
This year, the jury president lineup is comprised of 57 percent women — the highest in the awards’ history.
One of them, Susan Credle, global chief creative officer, FCB, who is this year’s president of the titanium jury, said: “Advertising at its creative best is one of the most powerful economic-driving, business problem-solving, culture-changing agents in the world. By celebrating the work at the Cannes lions festival, we are reminded of our potential and inspired to live into it.”
Judging will take place during the festival in June. The hope is for the judges to be physically present together but if they are unable to do so, the festival has created a remote judging experience, which was implemented at its regional awards. “It (the judging process) is a crucial part of all of our Lions awards; a human experience but also a rigorous and robust process,” said Simon Cook, managing director, Lions.
Cannes Lions is scheduled to take place from June 21-25, 2021, and will incorporate the awarding of both the 2020 and 2021 Lions.
The full list of jury presidents for 2021 is:
Titanium Lions: Susan Credle, global chief creative officer, FCB, Global
Design Lions: Pum Lefebure, chief creative officer, Design Army, US
Film Lions: Richard Brim, chief creative officer, adam&eveDDB, UK
Mobile Lions: Andrew Keller, VP, global creative director, Facebook
Outdoor Lions: Luiz Sanches, chairman, chief creative officer & partner, AlmapBBDO, Brazil
Print & Publishing Lions: Liz Taylor, global chief creative officer, Leo Burnett, and worldwide chief creative officer, Publicis Communications NA
Radio & Audio Lions: Merlee Jayme, global president, dentsu mcgarrybowen and chairman Dentsu Jayme Syfu
Digital Craft Lions: Jax Ostle-Evans, managing director, Stink Studios, UK
Film Craft Lions: Kerstin Emhoff, president, PRETTYBIRD, US
Industry Craft Lions: Jayanta Jenkins, EVP, head of marketing, Disney+, global
Entertainment Lions: Jae Goodman, CEO, Observatory (A Stagwell and CAA Company), global
Entertainment Lions for Music: Wyclef Jean, president and chief strategy officer, Carnival World Music Group, US
Entertainment Lions for Sport: Ben Hartman, chief client officer, International, Octagon
Brand Experience & Activation Lions: Vicki Maguire, chief creative officer, Havas, UK
Creative Business Transformation Lions: Geoff Northcott, global chief experience officer & managing partner, EMEA, AKQA
Creative eCommerce Lions: Tiffany Rolfe, global chief creative officer, R/GA
Glass: The Lion for Change: Bozoma Saint John, global chief marketing officer, Netflix
Sustainable Development Goals Lions: Eduardo Maruri, VP global creative board & president/CEO Europe, Grey worldwide
Health & Wellness Lions: Tom Richards, global chief creative officer, 21GRAMS
Pharma Lions: Anne de Schweinitz, global managing director, Healthcare, FleishmanHillard
Innovation Lions: Claudia Cristovao, head of Google Brand Studio, APAC
Creative Effectiveness Lions: Ann Mukherjee, chairman and CEO, Pernod Ricard NA, US
Creative Data Lions: Maurice Riley, chief data officer, Digitas, Australia & New Zealand
Creative Strategy Lions: Suzanne Powers, global chief strategy officer, McCann Worldgroup
Direct Lions: Reed Collins, chief creative officer, Ogilvy, Asia
Media Lions: Philippa Brown, worldwide CEO, PHD
PR Lions: Gail Heimann, president & CEO, Weber Shandwick
Social & Influencer Lions: Debbi Vandeven, global chief creative officer, VMLY&R