Microsoft In Advanced Talks to Acquire TikTok amid Trump’s ban moves

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Microsoft Corp. is in advanced talks to acquire the U.S. operations of the Chinese-owned video app TikTok, according to people with knowledge of the discussions, in a deal that would be a concession to White House pressure and make the software giant a major player in social media.

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A sale to Microsoft, likely for billions of dollars, would be a win for both TikTok and its parent company, Bytedance Ltd., where executives had feared that the U.S. government would force device makers to take TikTok out of their app stores, according to another person familiar with the matter.

For the Trump administration, a sale of TikTok would also eliminate potential legal challenges—and public backlash—that could have occurred if the wildly popular app was forced off millions of American smartphones.

A deal could be completed by Monday, according to people familiar with the matter. The talks involve representatives from Microsoft, Bytedance and the White House. Talks are fluid, and a deal may not come together.

On his way back from Florida, President Trump told reporters on Air Force One he wasn’t in favor of a deal to let a U.S. company buy TikTok’s American operations.

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“As far as TikTok is concerned we’re banning them from the United States,” Mr. Trump said. “Well, I have that authority. I can do it with an executive order or that,” he said referring to emergency economic powers.

Bytedance had considered a broader range of options. However, the White House pressured Bytedance to sell TikTok’s U.S. operations to an American company, one of the people said.

A valuation couldn’t be learned. It could be tricky to put a price tag on a business that is under pressure from governments around the world but also growing rapidly.

News of the deal talks, earlier reported by Fox Business, came as the U.S. was concluding a security review that was expected to recommend that Bytedance sell TikTok.

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U.S. officials have expressed concerns that TikTok could pass on the data it collects from Americans to China’s authoritarian government. TikTok has said it would never do so.

TikTok, the popular video-messaging app with Chinese roots, is facing global scrutiny as countries consider imposing restrictions on the company. WSJ’s Liza Lin explains why the U.S. government says the quirky platform poses a risk on American smartphones. Photo composite: Sharon Shi

In a statement posted online this week, TikTok CEO Kevin Mayer, who was hired away from Walt Disney Co. earlier this year, said the company was committed to transparency in how it collects and shares data.

“TikTok has become the latest target, but we are not the enemy,” he said.

A Microsoft spokesperson declined to comment.

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For the Redmond, Wash., software giant, a TikTok deal would be its splashiest acquisition since its 2016 purchase of LinkedIn for more than $26 billion and would immediately make it a formidable rival to social-media stalwarts Facebook Inc. and YouTube.

Facebook and YouTube parent Alphabet Inc. would have been likely suitors in years past, but they are facing tough regulatory scrutiny, including over whether their past acquisitionsdeals have hindered competition.

TikTok, known for its catchy dancing and lip-syncing videos, has soared in popularity this year amid the pandemic. About 315 million users downloaded TikTokit in the first quarter of the year, the most downloads ever for an app in a single quarter, according to research firm Sensor Tower, bringing its total to more than 2.2 billion globally.

The U.S. historically has accounted for about a 10th of TikTok users. In addition to concerns that TikTok could collect data on Americans, U.S. officials worry that the app could be used to spread Chinese propaganda and that the platform’s moderators could be censoring content to appease Beijing.

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The review of TikTok has centered on ByteDance’s 2017 acquisition of a similar video-sharing platform called Musical.ly, a Shanghai-based service that had built a strong U.S. user base. After the acquisition, Musical.ly’s platform was rebranded as TikTok, and users who wanted to share videos could continue to do so on TikTok’s platform.

ByteDance, whose secondary shares have valued it at $150 billion recently, counts big-name U.S. investors such as Coatue Management and Sequoia Capital as backers.

The Committee on Foreign Investment in the U.S. began its probe into TikTok last year, amid concerns from members of Congress and others about the data it might be collecting.

In a statement Friday, Rep. Michael McCaul (R., Texas) welcomed the possible separation of TikTok from Chinese ownership but said “more must be done across the board to disentangle American consumers from Chinese Communist Party-controlled technology and apps.”

“This isn’t just about the CCP collecting data from unwitting Americans on TikTok or similar apps; they also control the content users see,” Mr. McCaul said.

The U.S. has increasingly focused on deals that put U.S. citizens and their privacy at risk, a focus that Congress ordered in a 2018 law.

Under that law, regulators can investigate deals involving foreign money if that business has access to data on more than one million people, including certain genetic and biometric data, financial data and health data. The rules also apply to investments in U.S. businesses that track users’ locations or target U.S. military or national security personnel.

The Treasury-led foreign-investment committee is made up of federal agencies and reviews deals involving foreign money to ensure they don’t put the country’s national security at risk.

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Earlier this year, Mr. Trump ordered another Chinese company to sell its stake in a Maryland property-management software firm, a platform that hotels and casinos use to enable guests to check into rooms using smartphones. That order marked the sixth time a U.S. president has either blocked a deal or ordered a corporate selloff since Congress authorized the power to intervene in 1988.

At a congressional hearing this week on the market power of big tech companies, Facebook Chief Executive Mark Zuckerberg made it clear that he intends to address threats from China—a not-so-veiled reference to TikTok’s rise.

Mr. Mayer, TikTok’s CEO, fired back in a blog post Wednesday morning, disparaging Facebook’s “copycat” efforts to match TikTok and saying many attacks on the company are “disguised as patriotism.”

—Kate Davidson and Alex Leary contributed to this article.

Naija247news
Naija247newshttps://www.naija247news.com/
Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

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