TikTok’s videos could fuel Microsoft’s artificial-intelligence ambitions

That’s emerging as a crucial component for the creation of artificial intelligence, the technology that can understand speech, decipher images and handle tasks that require basic decision-making skills. And it’s one reason Microsoft is negotiating with TikTok parent ByteDance to acquire the app’s operations in the United States, Canada, Australia and New Zealand.

“If AI is the new electricity, the fuel that powers these plants is data,” said Oren Etzioni, chief executive of the Allen Institute for Artificial Intelligence, a Seattle research firm started by Microsoft co-founder Paul Allen.

TikTok has no shortage of data in the form of videos, billions of which are uploaded to the service every year. Those videos offer insight into pop culture. They show people of different ethnicities engaged in a variety of activities. Microsoft can feed all that data into “training models” that help its artificial-intelligence systems learn.

“You don’t really have that fire hose unless you’re plugged in from the inside,” Etzioni said.

And Microsoft’s biggest rivals in developing artificial-intelligence systems all have their own video data fire hoses, said Noah Goodman, a professor of natural and artificial intelligence at Stanford University. Google owns YouTube, Amazon owns the Twitch game-streaming service, and Facebook’s massive base of users regularly posts videos. (Amazon chief executive Jeff Bezos owns The Washington Post.)

“For the other big AI players, they have some very large sources of consumer video data,” Goodman said. Microsoft “uniquely doesn’t have access to that among the big AI companies.”

Enter TikTok. Last Friday, President Trump said he planned to ban the app from operating in the United States, after the administration raised national security concerns that ByteDance could hand over data on Americans to the Chinese government. Despite earlier considering ordering a sale of the app, Trump on Friday evening said he was not in favor of that path.

But after speaking with Microsoft chief executive Satya Nadella on Sunday, the company said Trump was swayed. TikTok now has until Sept. 15, when the app needs to be sold to a U.S. company or cease operations in the country.

From the administration’s perspective, Microsoft is an attractive buyer because it’s one of the few tech giants that isn’t being investigated for anti-competitive tactics. The chief executives of Google, Amazon, Facebook and Apple all appeared last week before a House subcommittee investigating tech giants’ abuse of their power. But not Nadella.

The 45-year-old software giant remains one of tech’s most powerful companies. Its market value topped $1.6 trillion at Tuesday’s market close, second behind only Apple among U.S. publicly traded companies. And it’s flush with $136.5 billion in cash and easy-to-access funds, money that would simplify a TikTok deal.

If an acquisition goes through, it would create an opportunity for Microsoft to harvest video data from TikTok’s 100 million U.S. users to fuel its AI ambitions. At a basic level, data culled from TikTok’s videos could help understand what trends consumers think are cool and what brands are particularly hot. Those details could help brands develop their own videos to lure customers, said Matt McIlwain, managing director of Madrona Venture Group, a Seattle firm that invests in technology start-ups.

“What causes a video to go viral? Is it the dance moves? Is it the music?” McIlwain said.

And the video data could offer computer scientists the ability to push the state of the art in AI. One possibility: training computer programs to lip-read, Stanford’s Goodman said. It’s a nascent piece of computer science, but digital lip-reading could go beyond helping the deaf. It could also be used to improve computer understanding of speech.

If Microsoft succeeds in acquiring TikTok’s operations, it would probably let the company run relatively independently, in the same way it has kept recent acquisitions such as social network LinkedIn and software developer service GitHub autonomous. But Microsoft has sophisticated advertising technology it developed for its Bing search engine that could help TikTok make money more quickly than it might otherwise have done, Stifel Nicolaus analyst Brad Reback said.

And Microsoft, which has thrived financially in recent years on the strength of its cloud-computing services, has time on its side. Given the Sept. 15 deadline, ByteDance needs to unload TikTok’s U.S. operations or risk losing the business altogether.

“There’s a half-life here,” Reback said.

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