TikTok and Microsoft. Deal or no Deal?

TikTok on iPhone

Scrutiny from the U.S. government towards TikTok, owned by Chinese parent-firm ByteDance, had been growing for a while. Military personnel have been told not to have the video-sharing app on their devices due to the perceived security threat. Then, on Friday, the Wall Street Journal reported that Microsoft was in “advanced talks” to buy it, bringing TikTok to U.S. shores.

TikTok Airbnb
TikTok launched a virtual Airbnb experiences.

U.S President Threatens to ban TikTok

That same day, U.S. President Donald Trump had threatened to ban the TikTok. As the New York Time‘s Taylor Lorenz reported:

The surprise announcement sent influencers in droves onto livestreams to give possibly premature teary and heartfelt goodbyes to their fans, asking them to join them on apps like Instagram, YouTube and Triller. For agencies that manage talent on the platform, it was a long weekend of hand-holding and downloading TikTok archives for posterity.

On Sunday, things changed again. In a statement, Microsoft said it was continuing its bid to buy the TikTok business in the U.S., Canada, Australia, and New Zealand, and “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.”

Meanwhile, President Trump said that TikTok “close down on September 15th unless Microsoft or somebody else is able to buy it and work out an appropriate deal so the Treasury, I guess you would say, of the United States gets a lot of money.”

[Is TikTok Really a Security Threat? Here’s What Experts Found]

Microsoft Steps Into Highly Political Situation

Why, then, would Microsoft want to get involved in a deal that has become so overtly political? It was, after all, the only big tech firm not asked to appear in front of lawmakers recently. The answer, as ever, is data. In its Sunday blog post, the company said that it “would ensure that all private data of TikTok’s American users is transferred to and remains in the United States.”

As Tom Warren at the Verge noted, Microsoft has been trailing in the mobile and consumer tech spaces, and TikTok’s data may help it plug the gap. “A large number of young Americans are growing up in an environment dominated by Android, iOS, and Chromebooks in classrooms,” he wrote. “With Gmail also dominating consumer email usage and document sharing through Google Docs, it’s possible to grow up in the US without needing any Microsoft software or services.”

Will China Seek Revenge on Apple?

Furthermore, there is growing speculation that Apple will be on the receiving end of a backlash from the Chinese government. There have been references to the “theft” of TikTok in Chinese state-run publications. This happened when Huawei faced scrutiny and bans. TikTok regularly tops the App Store charts. Now it seems it is down to Microsoft to save it.

[Update: 5 August] Microsoft Has One Year to Transfer 15 Million Lines of TikTok Code

TikTok and Microsoft are still negotiating a price for the service. Current valuations are thought to be worth anywhere between $10 billion and $30 billion. Furthermore, if the deal, does go through, the video-sharing app has agreed to transfer its 15 million lines of code to the U.S. Microsoft obviously has the capability to do this, boosting its bid to make the acquisition.

2 thoughts on “TikTok and Microsoft. Deal or no Deal?

  • But then this morning US President Benito Cartman said the US should get a cut of the sale price. A move described by more than a few tech analysts as “Mafialike”.
    But better to do this than, you know, dealIng with real problems facing the country.

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