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Microsoft confirms talks to buy TikTok's U.S. operations

Yahoo Finance’s Editor-in-Chief Andy Serwer joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss the possibility of Microsoft buying ByteDance's TikTik operations in the United States. Serwer also breaks down what this means for the overall social media industry.

Video Transcript

ALEXIS CHRISTOPHOROUS: First off, just explain why TikTok might be valuable to Microsoft, which already owns Minecraft and Xbox, so it's in bed a little bit with the younger set. But I guess TikTok would really allow them to be cool and have that cool factor with the tweens, something it really doesn't have now.

ANDY SERWER: Yeah. A lot of people raising their eyebrows specifically at that point, Alexis-- like, Microsoft, cool in the same sentence? And of course, they also own LinkedIn, so they've been building a portfolio of more consumer-facing properties. And they really do need this area to grow in because not only is it a younger demographic, but it's also pushing out into social media. And it helps them connect with a younger audience, which will help them grow and also connect to the other properties as well.

There's a lot of things that they can do with this. But definitely a big soap opera here because, of course, the audience of TikTok has been very unfriendly, generally speaking, to President Trump. So it's kind of convenient that he's looking to take this company to task here. And don't forget as well the little interesting interlude we had with Amazon with TikTok several weeks ago when apparently, they were going to ban it internally, and then they retracted that position.

- Andy, in the pre-market, we're seeing Snapchat, so our snapping shares, down about 3%. Twitter shares are up. But what would this acquisition mean for Snapchat?

ANDY SERWER: Well, it probably wouldn't be that good because Microsoft would be able to superpower it. And you didn't mention another company that's very much in play here as well, Brian, and that's Facebook. And Facebook is very concerned about TikTok. We know that for sure because a lot of people have been saying, oh, there's no real competitor to Facebook.

It looked like Snap was going to be that competitor, but they don't really have the traction or really the scale at this point. Even though it is a very big company for social media, it's nothing compared to Facebook. TikTok has made some real inroads. So that would be very interesting to see, actually, TikTok, powered by Microsoft, going up against Facebook.

ALEXIS CHRISTOPHOROUS: Andy, what about the question of privacy, which is at the crux of the US issues with TikTok, the fact that TikTok has all this data, this information on US users that the White House fears it is sharing with its Chinese parent company, ByteDance. We see the Feds coming down hard on companies like Facebook and Google when it comes to privacy. Isn't buying TikTok throwing Microsoft into that arena? Why would it want to be bothered?

ANDY SERWER: Well, that's a great question. And they're going to have to sort that out, Alexis. That's the crux of the whole matter, which is privacy, as you said. That's what the White House was using as this reason for making sure that it was going after this company and having a real justification for doing so.

Apparently, the reports are that ByteDance, which is the parent company of TikTok, would allow the US entity to capture and hold the data of its US consumers, and in fact, I understand the non-China consumers that use TikTok inside the US, or at least outside of China. But figuring that out and making sure that the White House and Mike Pompeo are onboard with that is going to be the whole sticky wicket, if you will, for Satya Nadella and the folks at Microsoft.