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Will TikTok be forced to turn fully American?

Microsoft to buy TikTok: Microsoft said that it is committed to acquiring TikTok provided it successfully completes a security review. It said that the company will pursue discussions with ByteDance and would complete the talks no later than September 15

twitter-logoBusinessToday.In | August 20, 2020 | Updated 10:13 IST
Will TikTok be forced to turn fully American?
Microsoft in talks with ByteDance to buy TikTok

To sell or not to sell -- that is the question ByteDance is facing in the US. The company is in quite a conundrum as it is, in a nutshell, either looking at a ban on its popular video sharing app TikTok or to sell it to Microsoft. The Satya Nadella-headed company is in talks with ByteDance to buy TikTok. The third side of this development is the Trump administration which fears that personal data of Americans could be turned over to China by the company.

Reports of Microsoft's talks with ByteDance emerged on Saturday after Reuters reported that the company is looking to divest its US operations of TikTok after Trump said that he plans to ban the app. "We may be banning TikTok. We'll see what happens," said Trump to reporters on Friday. The report stated that ByteDance would exit completely and Microsoft would take over. Microsoft, which owns professional social media network LinkedIn, would be in charge of protecting all of TikTok's US user data.

However, as per reports, President Donald Trump was not in favour of the acquisition -- in the beginning. "It's not the deal that you have been hearing about that they are going to buy and sell, and this and that - and Microsoft and another one. We're not an M&A country," he had said leaving Microsoft in the lurch.

Also read: TikTok's loss is Instagram's gain; 55% influencers favour Facebook-owned platform after Chinese apps ban

Following reports of Trump's disapproval, Wall Street Journal said that Microsoft paused their negotiations with ByteDance. However, something changed on Sunday. Microsoft said that the negotiations are back on after Satya Nadella spoke to Trump. "Following a conversation between Microsoft CEO Satya Nadella and President Donald J Trump, Microsoft is prepared to continue discussions to explore a purchase of TikTok in the United States," the company stated in a blog post.

Microsoft said that it is committed to acquiring TikTok provided it successfully completes a security review. It said that the company will pursue discussions with ByteDance and would complete the talks no later than September 15. "During this process, Microsoft looks forward to continuing dialogue with the United States Government, including with the President," it said.

"Among other measures, Microsoft would ensure that all private data of TikTok's American users is transferred to and remains in the United States. To the extent that any such data is currently stored or backed-up outside the United States, Microsoft would ensure that this data is deleted from servers outside the country after it is transferred," it said.

Also read: Chinese app ban: TikTok says ready to store data locally, denies breach of user privacy

As per reports on Monday, Trump has given ByteDance 45 days to negotiate the sale of TikTok. The negotiations between ByteDance and Microsoft would be overseen by the Committee on Foreign Investment in the US that has the power to block any agreement.

Meanwhile, TikTok stars in the US were heartbroken to learn of the impending fate of their favourite app. Creators released emotional goodbyes, announcements on where else they can be followed, and some were outraged. Some even tried to appeal to Trump. TikTok US General Manager Vanessa Pappas in a TikTok video message put their fears to rest. "I just want to say thank you to millions of Americans who use TikTok every day, bringing their creativity and joy into our daily lives. We've heard your outpouring of support and we want to say thank you. We are not planning on going anywhere," she said.

THE DEAL

Microsoft is planning to take over TikTok's operations in the US, Canada, Australia and New Zealand. The company might also invite other investors to acquire minority stakes in TikTok.

It is still unclear how much Microsoft would pay for TikTok. According to Reuters, ByteDance's valuation of the app exceeded $50 billion. However, pressure to divest might lower the price tag.

Microsoft might give ByteDance some transition time to develop technology specifically for TikTok as separating the app from the parent company's infrastructure and access would be one of the concerns if the deal follows through.

Also read: Investors price TikTok at $50 billion in takeover bid

Also read: TikTok could operate as an independent US firm: White House official

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