Technology Aug 03

Microsoft gets six weeks to negotiate TikTok deal

Tech giant says it aims to complete buyout of popular short-video app by Sept 15; Sources say US officials will monitor negotiations with Bytedance; deal could also include Canada, Australia and New Zealand

Microsoft gets six weeks to negotiate TikTok deal
Microsoft CEO Satya Nadella addresses the Future Decoded Tech Summit in Bangalore in February 2020. The company said on August 2 it was continuing talks with Chinese-owned video sharing app TikTok to purchase its US operations, following a conversation with President Trump. Photo: Manjunath Kiran / AFP.

(ATF) President Donald Trump has given Microsoft six weeks to negotiate a deal to take over the operations of TikTok from Chinese conglomerate Bytedance – in the US and several other countries.

Trump had threatened to ban the popular mobile app, because of "national security" concerns about the large quantity of personal data it stores.

However the president appears to have backed away from his earlier threats to ban the Chinese-owned platform after discussing the deal with Microsoft CEO Satya Nadella on the weekend. 

Microsoft issued a statement on Sunday saying it would continue negotiating with Bytedance about acquiring TikTok, with the aim of reaching a deal by September 15.

This has led to speculation that colleagues in the Republican Party and some of Trump's advisers feared that banning TikTok would alienate young users of the app ahead of the election in November – or could trigger legal challenges and block the prospect of many jobs being created in the US.

Sources said negotiations between ByteDance and Microsoft will be overseen by the Committee on Foreign Investment in the United States (CFIUS), a US government panel that has the right to block any agreement, according to Reuters.

"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 said in a statement.

“Microsoft fully appreciates the importance of addressing the President’s concerns. 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,” it said, adding that there is no certainty a deal will be reached.

The TikTok app is popular with youngsters who create and watch its short-form videos and has hundreds of millions of users worldwide.

Treasury Secretary Steven Mnuchin told ABC earlier on Sunday that TikTok should be sold or blocked in the US, while Secretary of State Mike Pompeo said on Fox News the president would "take action in the coming days with respect to a broad array of national security risks that are presented by software connected to the Chinese Communist Party."

'No evidence'

But TikTok denies it could be a tool for Chinese intelligence.

"The United States would be the biggest loser if it banned TikTok," Daniel Castro, vice president of the think tank Information Technology & Innovation Foundation, told AFP on Saturday.

"All of its data centres are outside of China, and there is no evidence that it presents a national security threat."

Relations between the US and China have become increasingly strained over trade, the spread of the coronavirus, autonomy for Hong Kong, as well as cybersecurity. TikTok is simply the latest flashpoint between the world’s two largest economies.

The China Daily said on Monday that ByteDance was the victim of a “witch-hunt” and that Washington had not provided evidence to support its claim TikTok posed a threat to US national security.

Microsoft said in its statement that it plans to "build on the experience TikTok users currently love, while adding world-class security, privacy, and digital safety protections."

Buying TikTok – which claims to have about 100 million users in the US – would give Microsoft a chance to break into the social networking market. The group currently owns the professional networking platform LinkedIn, and Teams, an internal messaging service for companies.

Takeover could include Canada, Australia and NZ 

Under the proposed deal, Microsoft said it would take over TikTok’s operations in the United States, Canada, Australia and New Zealand.

It said it would ensure that all private data of TikTok’s American users is transferred to and remains in the United States.

Microsoft may invite other American investors to acquire minority stakes in TikTok, the company added. About 70% of the outside capital ByteDance has raised has come from the United States.

It is not clear how much Microsoft could pay for TikTok. Reuters reported last week that ByteDance’s valuation expectations for the app exceeded $50 billion, although US pressure to divest it could lower that price tag.

A key issue in the negotiations will be separating TikTok’s technology from ByteDance’s infrastructure and access, to alleviate US concerns about the integrity of personal data. ByteDance owns a Chinese short video app called Douyin that was based on the same code used for TikTok.

One idea under consideration is to give Microsoft and ByteDance a transition period to develop technology for TikTok that will be completely separate from ByteDance, one of the sources said.

With reporting by Reuters and AFP

ALSO SEE: Bytedance ready to sell TikTok in US: report 

TikTok: Dark side to the fun app? 

Top US aide expects tough action on TikTok, WeChat 

Tiktok denies sharing Indian user data with Chinese govt 

China bemused and bewildered by India's app ban