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TikTok has 45 days to become American or face US ban: 5 key points

US President Donald Trump has said ByteDance's TikTok will be blocked from all transactions in the US after 45 days. Here is what it means for TikTok and you who is residing in India.

twitter-logoShubham Verma | August 7, 2020 | Updated 14:21 IST

Highlights

  • TikTok has 45 days before Trump administration asks its parent ByteDance to suspend transactions.
  • On the forefront is Microsoft that has talked to Trump's government over TikTok's acquisition in the US.
  • A report suggested Microsoft could be planning to take over TikTok's global operations instead.

TikTok is facing an ultimatum from the US President Donald Trump -- get itself an American owner or get ready to face the ban. The former, of course, has much grey area right now considering the pace Microsoft is heading with over its interest in acquiring ByteDance's popular video-sharing app in certain markets. But the latter could just mark the end of ByteDance's stronghold in the category that TikTok popularised, so much so its rivals set out to copy it.

Trump administration has set a deadline of September 20 for TikTok to find a suitor or its current parent company ByteDance will be blocked from continuing or making any transactions in the US. This means that ByteDance has only a few days to sell the operations of TikTok in the US to a company that does have its roots in China. At the frontier is Satya Nadella-led Microsoft that confirmed it is in preliminary talks with Trump's government over potentially acquiring TikTok's business in the US, Canada, Australia, and New Zealand. Nadella said nothing is set in stone right now and there might not even be a deal since these discussions with Trump are very much tentative.

So, what does it mean for TikTok and how will it affect Indians?

1. If Microsoft finalises its decision to take over the reins of parts of TikTok in the US and three other countries, TikTok will save itself from facing a sweeping ban in one of its important markets. The ByteDance's app was downloaded over 165 million times in the US, according to SensorTower's April survey, making it one of the important markets. With a new owner, TikTok will not have to be under the scanner anymore for its belongingness to the Chinese company.

2. Microsoft's Nadella held talks with Trump to talk taking over TikTok in the US and the results are expected to be finalised by September 15. Trump has also iterated the same timeline for ByteDance to find itself a solution or else, according to the new executive order, the Chinese company will be barred from carrying out any transactions, which means it will not be able to sell any of its business, including that of TikTok, to any American company. Ultimately, in the absence of a non-Chinese owner, TikTok will be prone to a blanket ban in the US.

3. Trump's executive order does not infer the erasure of TikTok from app marketplaces in the US yet. Both Google Play Store and Apple's App Store are allowed to continue listing TikTok unless an explicit order is issued by the US government. This is a respite to TikTok for now as it can continue to pull more customers through the easiest means (app stores are the most visited places for downloading apps). But, in stark contrast to Trump's executive order, India immediately asked Google, Apple, and Internet Service Providers to block TikTok following the ban on the ByteDance's app and 58 other Chinese apps.

4. TikTok's acquisition in the US, Canada, New Zealand, and Australia could be just a chunk of Microsoft's ambitious plan to make a grand entry into the social media business. Unlike its arch-rivals, Microsoft has mostly stayed away from entering the mainstream social media industry. Its Yammer and Sprinklr apps are used for internal communication mostly and do not have a larger impact on the global internet population. With TikTok, Microsoft could finally enter the space, only to dominate from the first go because of TikTok's popularity. Industry heavyweights including Facebook have feared the global acceptance of TikTok over other apps that let you create short-form videos and remix them.

5. Microsoft is also reportedly mulling to go beyond just acquiring the TikTok business partly. According to a Financial Times report, Microsoft could be chasing a deal to acquire TikTok in its entirety from ByteDance. This means the global operations of TikTok, except for its China where TikTok operates as Douyin, will be under Microsoft's clutch if things pan out Satya Nadella's company favour. This would also mean that the existing ban on TikTok in India could be re-evaluated, only to end up getting lifted in favour of Microsoft's new business. TikTok servers are mostly in China -- one of the reasons why India banned TikTok in the first place -- but Microsoft may need to move them outside of it to be able to pitch business restart in India.

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