Microsoft nears big bet on TikTok after risky LinkedIn deal shows promise

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Microsoft Corp's potential acquisition of short-video app TikTok carries myriad risks, thrusting it into the politically fraught social media ...

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Microsoft Corp's potential acquisition of short-video app TikTok carries myriad risks, thrusting it into the politically fraught social media business and Sino-U.S. conflict amid increased scrutiny of big-tech companies.

TikTok has taken teenagers around the world by storm and emerged as a significant competitor to Facebook and Google's YouTube. But like rivals, TikTok faces substantial new costs for content moderation as the spread of misinformation and allegations of political bias roil social media. The LinkedIn acquisition in 2016, for 50per cent above its share price, was Nadella's biggest and riskiest. Microsoft shares fell 3per cent when it was announced with analysts expressing concern about slowing revenue growth and an expected cap on usage.

Overall, LinkedIn has generated US$14.3 billion in revenue for Microsoft through ads and subscriptions, though analysts estimate it remains unprofitable. LinkedIn came to Microsoft at 13 years old with 11,000 employees and 105 million monthly users globally. Six-year-old TikTok, by contrast, has about 1,000 U.S. employees and has been downloaded 226 million times in the four countries targeted by Microsoft's deal, showed data from app tracker Sensor Tower.

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