Microsoft has confirmed it is in talk to acquire some TikTok operations from Chinese parent ByteDance. The move follows reports in the US government is looking to ban TikTok in the country on national security concerns, due to the company's potential ties to the Chinese government and consequences for US user data privacy.
US media reports suggested that US President Trump was looking to ban TikTok as soon as 1 August, either with an executive order or through emergency economic powers. While the deal with Microsoft could prevent the ban, the Wall Street Journal reported that the president was against the deal. Trump has said he would prefer to ban the app entirely.
In a blog post, Microsoft CEO Satya Nadella said he has informed Trump that the company was prepared to continue acquisition talks and that it fully appreciated the importance of addressing the president’s concerns. The company said it was committed to acquiring TikTok “subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.” Microsoft added that it hoped to complete the discussion no later than 15 September. It is now waiting for clarity from the Trump administration.
Under the proposed deal, Microsoft would buy the operations of TikTok in the US, Canada, Australia and New Zealand. The company said other US investors would be invited to participate on a minority basis. Microsoft would then set up security, privacy, and digital safety protections, with an operating model ensuring transparency to users as well as appropriate security oversight by governments in these countries. To help implement this, Microsoft would make sure all US user data was transferred and stored in the US. Any data currently stored outside the country would be deleted after repatriation.
Under the discussion, TikTok said it would add up to 10,000 jobs in the US over the coming three years. ByteDance founder Zhang Yiming had also agreed to sell his stake but would retain some kind of minority share. Microsoft noted that talks were still at a preliminary stage but reports said the plans were quite advanced before Trump showed his opposition, and that a deal was set to come together on 3 August.
The WSJ said ByteDance had earlier wanted to avoid a sale of its US operations, believing it could eventually challenge Facebook for users and ad revenue. ByteDance has increasingly tailored its content policies to the different places where it operations. Sources say ByteDance expects its app to bring in USD 1 billion in revenue this year and USD 6 billion next year. Globally, TikTok is not yet profitable. The company said it has 100 million users in the US.
