This post is by M.G. Siegler from 500ish - Medium
Bill Gates sure seems to feel strongly about that TikTok deal…
Like seemingly everyone on the internet, I thought Steven Levy’s interview with Bill Gates for Wired last week was great. Obviously, the COVID-related parts are the most important. But Gates’ thoughts on the perhaps even more timely topic (thanks to the President’s odd timetable), Microsoft’s would-be acquisition of TikTok were fascinating as well:
As you are the technology adviser to Microsoft, I think you can look forward in a few months to fighting this battle yourself when the company owns TikTok.
Yeah, my critique of dance moves will be fantastically value-added for them.
TikTok is more than just dance moves. There’s political content.
I know, I’m kidding. You’re right. Who knows what’s going to happen with that deal. But yes, it’s a poison chalice. Being big in the social media business is no simple game, like the encryption issue.
So are you wary of Microsoft getting into that game?
I mean, this may sound self-serving, but I think that the game being more competitive is probably a good thing. But having Trump kill off the only competitor, it’s pretty bizarre.
Do you understand what rule or regulation the president is invoking to demand that TikTok sell to an American company and then take a cut of the sales price?
I agree that the principle this is proceeding on is singly strange. The cut thing, that’s doubly strange. Anyway, Microsoft will have to deal with all of that.
I mean, using the term “poison chalice” seems like a pretty bold statement from Gates! If he means it literally:
an assignment, award, or honor which is likely to prove a disadvantage or source of problems to the recipient.
If he means it in the Macbeth sense, it’s perhaps even more literal.
Maybe — maybe — he’s just referring to the tricky political content on the app. But it doesn’t read that way. It reads as if he’s… awfully negative about Microsoft doing such a deal. And that’s a big deal! It’s literally a big deal! And Gates is figuratively a big deal! Certainly within Microsoft, still!
When Levy follows up to ask him about that stance more directly, Gates softens a bit, but only by way of misdirection, noting that he thinks there needs to be more competition in the space (implying domination by Facebook, of course). But again, that doesn’t mean that he thinks Microsoft should do this deal, just that TikTok shouldn’t be banned, and implying that Microsoft’s saving of it may be the only alternative.
Again, this is all hardly a resounding endorsement of the deal. And the political complexity on top of it just adds to the headaches, in Gates’ head.
Now, perhaps he just wants to give CEO Satya Nadella and the board (which Gates is no longer on, remember) room to maneuver in their own way without him holding sway over every deal. But again, this is a massive deal, and Gates has to know that any comment he has on the matter will be seen as important with regard to the company he built. He could have couched his thoughts more, but he chose not to. Which, again, seems to imply quite a bit.
This entire deal continues to feel off in a number of ways. And while it’s seemingly evolving to make a bit more sense (taking over TikTok for the entire world, rather than just four countries, certainly makes more sense), there are other things unfolding which make even less sense. And Microsoft is treading on dangerous political ground here, to say the least.
In a way, this feels almost more like a Steve Ballmer deal rather than a Satya Nadella one. Ballmer, of course, was able to milk Microsoft for profits in fantastic new ways during his tenure as CEO. But the market viewed it as more or less of a ‘lost decade’, which in hindsight, feels correct. Nadella has turned that around in spectacular fashion, of course. And that’s perhaps what’s so surprising here: Nadella has added $1T to Microsoft’s market cap, he doesn’t have to do this deal to prove anything. It feels like an overreach.
Perhaps he feels as if it’s Microsoft’s path back into consumer (Xbox aside) in a meaningful way. Or perhaps more importantly, back into mobile. Or maybe he just sees a deal that he knows Microsoft is uniquely positioned to pull off and wants to take advantage of that opportunity.
But again, like Gates, I don’t know. Something about it feels a bit like Ballmer’s ill-fated attempt to buy Yahoo — which perhaps would have sunk both companies, in hindsight. Or the Nokia deal, which was a shockingly fast total write-down. But even that was “only” $7B. If this is really $30B or $40B or more… There’s a lot at stake here!
But here upon this bank and shoal of time,
We’d jump the life to come. But in these cases
We still have judgement here, that we but teach
Bloody instructions which, being taught, return
To plague th’inventor. This even-handed justice
Commends th’ingredience of our poisoned chalice
To our own lips.
— Macbeth, Act 1 Scene 7