In a bid to salvage a deal for the U.S. operations of TikTok, Microsoft Corp. Chief Executive Officer Satya Nadella spoke with President Donald Trump by phone about how to secure the administration’s blessing to buy the wildly popular, but besieged, music video app.
Microsoft in a blog post Sunday confirmed talks to buy TikTok’s operations in the U.S., as well as in Canada, Australia and New Zealand, and said it’s aiming to complete the deal no later than Sept. 15.
The software giant’s public statement follows closed-door discussions with TikTok and Trump, who floated plans for an outright ban of the app on national security grounds and publicly lambasted the idea of a deal late Friday night. The companies now have 45 days to hash out a plan acceptable to all parties, a deadline insisted on by the White House, according to people familiar with the matter. The two companies have not yet worked out key details for a deal, including price, according to people familiar with the matter.
TikTok has become a flash point among rising U.S.-China tensions in recent months as U.S. politicians raised concerns that parent company ByteDance Ltd. could be compelled to hand over American users’ data to Beijing or use the app to influence the 165 million Americans, and more than 2 billion users globally, who have downloaded it. The app also drew ire from the U.S. president after anti-Trump activists used the platform to disrupt campaign activities.
In its blog post, Microsoft pledged to add more security, privacy and digital safety protections to the TikTok app and ensure that all private data of Americans be transferred back to the U.S. and deleted from servers outside the country. The company also said it may invite other American investors to take minority stakes in the company.
“Microsoft fully appreciates the importance of addressing the President’s concerns,” the company said. “It is committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.”
If a deal goes through, it would mark a dramatic intervention by the U.S. government in private enterprise and alter the global technology landscape. It would hand Microsoft a much more prominent role in social media and online advertising – and threaten to end an era of globalization in the tech industry.
Microsoft’s statement didn’t explicitly say whether Trump would approve an agreement and forgo a TikTok ban, though Microsoft would likely make such a public pronouncement only if it thought that would be forthcoming. Microsoft’s shares rose more than 4% in Germany.
A TikTok spokeswoman declined to comment, while the White House didn’t immediately respond to a request for comment. Bytedance is committed to becoming a global company and strictly abides by local laws, the TikTok owner said in an online statement Sunday.
The blog post from Microsoft came after a weekend of tense negotiations that lasted late into the night among Microsoft, TikTok and the White House, as well as a string of appearances on Sunday morning cable shows by U.S. politicians trying to sway the President’s decision.
Factions within the administration and Congress have split into two camps: Those that want to keep the wildly popular music video app in operation by delivering it into the arms of an American company, and those that want to ban the app altogether in the U.S. because of TikTok’s Chinese roots. The latter would send a message to China that the U.S. too can also block internet companies from operating on its shores like China does with Facebook, Twitter and Google.
TikTok was launched in the U.S. more than two years ago, following Bytedance’s 2017 purchase of lip-synching app Musical.ly, which it folded into TikTok. The app became a social-media hit in the U.S – the first Chinese platform to make such inroads.
As TikTok surged to popularity, officials began calling for a national security investigation into the app. In November 2019, The Committee on Foreign Investment in the United States, or CFIUS, which investigates overseas acquisitions of U.S. businesses, opened a review of the Musical.ly purchase.
TikTok has repeatedly rejected accusations that it feeds user data to China or is beholden to Beijing, even though ByteDance is based there. It spent months trying to distance itself from its Chinese roots. It hired its first American CEO in June, former Walt Disney Co. executive Kevin Mayer, as well as dozens of D.C. lobbyists. It announced plans for a new global headquarters outside of China and said it was considering other organizational changes to satisfy U.S. authorities.
The purchase of TikTok’s operations in the U.S. and the three other countries, should it be concluded, would represent a huge coup for Microsoft. The world’s largest software company would gain a social-media app that has won over young people with a steady diet of dance videos, lip-syncing clips and viral memes.
Microsoft and TikTok now have 45 days to hash out a price, terms, how Microsoft would pay for the unit, or how any technology-sharing or transfer of assets of the video-sharing app would work. Deal negotiations may be complicated by tensions between ByteDance investors eager for a big payout for the popular app and Microsoft executives who view themselves as a white knight rescuing a troubled business. The Trump administration could also throw a wrench into the process at any point. MDT/Bloomberg
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