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It's official: Microsoft is in talks to acquire TikTok's US operations (Update)
Update: August 10, 2020 (4:30AM ET): Microsoft is reportedly in talks with ByteDance about acquiring TikTok’s global operations, but it looks like another player may have entered the fray.
The Wall Street Journal reports that ByteDance and Twitter have held early discussions about a “potential combination,” citing people familiar with the situation. It’s believed that the talks involve TikTok’s US operations. Nevertheless, the outlet’s sources say Microsoft is still a front-runner to clinch the deal given its financial strength relative to Twitter.
However, Twitter thinks its size means it won’t face the same level of scrutiny from regulators as Microsoft, according to the outlet.
Time is ticking for a deal though, with Microsoft instructed to complete talks by no later than September 15. Furthermore, President Donald Trump signed an order banning TikTok from business dealings in the US in the event of a failed deal. The order goes into effect from September 20.
Original article: August 3, 2020 (5:03AM ET): We heard murmurings last week, but now Microsoft has indeed confirmed that it’s in talks to buy TikTok’s US business. The news comes shortly after President Donald Trump threatened to ban the short video service, citing national security concerns.
“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,” the Redmond company said in a blog post.
In other words, it certainly sounds like Microsoft acquiring TikTok’s US unit is a foregone conclusion at this point. However, the firm insists that the talks are early and that there’s no guarantee of a deal. The tech colossus nevertheless confirmed that it aims to complete discussions to acquire the service’s US operations “no later than September 15, 2020.”
Microsoft also noted that the discussions come on the back of a preliminary proposal to buy TikTok in the US, Canada, Australia, and New Zealand, with Microsoft operating the service in these markets. This suggests that the TikTok US talks will form part of a wider deal involving the operations of more countries. Although you have to assume that the service could still be operated by current owner ByteDance in most markets not mentioned here.
The Redmond company adds in its blog post that TikTok would gain “world-class security, privacy, and digital safety protections” as part of the deal. It also claims that TikTok would be more transparent for users, while also offering “appropriate security oversight by governments” in these proposed markets.
One of these measures includes transferring data belonging to TikTok’s US users to the US itself, then deleting the data from servers outside the country.
A successful acquisition means Microsoft would have two major social platforms under its umbrella, with the firm buying LinkedIn for $26 billion back in 2016. A similar deal for TikTok could also theoretically be a possibility in India, as the app has been banned there due to Sino-Indian tensions. However, this solution hasn’t been mooted in the market just yet.