Microsoft founder Bill Gates described his company’s entry into a potential deal to manage Chinese TikTok operations in several countries as “poison in honey.”
In an interview with Wired, Gates made it clear that Microsoft acquiring parts of TikTok will not be easy or simple.
Gates says, "Who knows what will happen with this deal .. But yes, I think it is poison in honey," adding that the acquisition of TikTok and the company being a major player in social media "is not a simple game", as Microsoft will have to deal with A whole new level of content moderation.
When asked if he was worried about Microsoft entering the social media game, Gates indicated that putting more pressure on Facebook "might be a good thing," but that "(US President) Donald Trump kills the only competitor (meaning TikTok) is a matter. Very strange".
Gates appears confused about the mechanism of this potential TikTok deal, especially with Trump's suggestion that the US Treasury Department obtain an amount from the deal in the event of the acquisition.
"The principle that Trump follows in forcing a foreign company to sell is a strange one," Gates says, adding that "the strangest thing is the deduction of the US Treasury Department, in any case Microsoft will have to deal with all of that."
Gates' comments come just days after Microsoft confirmed it was seeking a deal to buy Tik Tok operations in the United States, Australia, Canada and New Zealand.
Reports also indicated that Microsoft might consider buying all global TikTok operations, as the Financial Times suggested that talks about this particular deal are in the "initial" stage.
President Trump also claimed last week that he was a day away from the Tik Tok ban in the United States, before later setting a September 15 deadline for Microsoft to end its potential acquisition and avoid a Tik Tok ban.
This is not a long time to answer the many questions that will be necessary to complete the deal, as there are still complex questions about technology, privacy, leadership, valuation and ownership, confirming Bill Gates' concerns about the benefit of this deal to Microsoft.
These issues need to be worked not only between Byte Dance, the owner of the TikTok app, and Microsoft, but also with the US government, and the three-way talks are never easy, especially when the Trump administration seems to have conflicting ideas about whether to ban Tik. Tok or not.
White House Trade Adviser Peter Navarro said on Friday that he supported the ban and was not satisfied with Microsoft's intervention, while South Carolina Senator Lindsey Graham, who is close to Trump, defended the deal on his Twitter account.
There are also questions that experts say Microsoft must answer before the end of the deadline for completing the deal, and these are not easy questions.
How will the split work exactly?
If Microsoft were to run the service for the United States, Canada, Australia and New Zealand only, what happens when an American watches a Tik Tok video from a user in Europe?
"We will do our best to protect the uniqueness of the platform, and we hope that users will continue to enjoy an uninterrupted experience," ByteDance said in a statement.
But there are complex technical questions that the three parties have to solve, and the idea of dividing the company is to prevent the Chinese government from collecting data on American citizens through TikTok.
So, how will Microsoft separate and store data from parts that TikTok controls? And what data will they have to share with the rest of the organization to keep the service running smoothly? What about all the data that has already been collected? Should it be separated on the basis of the country? Who will oversee this chapter? How will they do that? Will Microsoft have to transfer the technology infrastructure of TikTok to its cloud services? How long will that take? How much will it cost?
Aside from the data: What about the algorithms that Tik Tok uses to determine which videos are promoted? And who will control those algorithms? How will this control be divided or negotiated?
We also do not know how keen ByteDance is to negotiate a sale that it never wanted. While the company admits that it had to hold sales talks to avoid the US embargo, it will not be keen to sell more of it.
Who will run Tik Tok in Microsoft?
TikTok appointed former Disney CEO Kevin Meyer as its new CEO in February, months before a possible forced sale of part of the company.
But will Meyer continue to operate the American portion of TikTok under Microsoft CEO Sataya Nadella? Or will he stay with ByteDance to run the app in the rest of the world? As it is known, Microsoft's experience is software for enterprises, and it is not clear that the company has a person in the current team who can manage a social networking site that competes with Facebook.
What is the price?
As companies negotiate terms with the US government, the nature or structure of the deal will affect the expected purchase price.
Shifting US, Canadian, Australian and New Zealand operations away from the rest of the company’s operations would lower the potential price of Tik Tok, yet the deal would likely be in the tens of billions of dollars.
TikTok said last week that it has about 100 million US users, and most of its accounts are the most followed American.
Could another buyer appear?
Microsoft was about to lay down the structure of the deal over the weekend, but now the deadline for the deal is next September 15, which opens the way for another player to appear on the scene, so can Tik Tok choose another buyer who can work with the application in America? Will the US government allow any company other than Microsoft to get the deal?
It is a complex deal that would give Microsoft a significant presence in the social networking arena with the risk of being part of a larger trade war between the United States and China. Gates is clearly wary of the acquisition, but we still have almost a month to figure out if it becomes a reality.