By Jonathan Easton
Microsoft said that it will push ahead with talks to acquire TikTok’s US business, as president Donald Trump continues to threaten the Chinese app.
The creator-driven, short-form video app TikTok has exploded in popularity over the past 12 months, but there have been a number of security concerns surrounding the data practices of Chinese parent company ByteDance. TikTok has spent months attempting to placate a hostile US government by shifting much of its operations to the country and appointing Kevin Mayer – the former D2C chief at Disney+ and driving force behind Disney+ – as its CEO.
In comments to journalists on Friday, the president said that “we may be banning TikTok”, and then doubled down with a concrete statement that the service would be removed the next day. At the time of writing, TikTok is still accessible in the US and can be downloaded on Android and iOS devices.
Further reports from Bloomberg and the Wall Street Journal clarified that the administration is considering a number of changes, including ordering ByteDance to “divest its ownership”.
As such, Microsoft emerged as a potential suitor, with the company publishing a blog post confirming that it is discussing a deal.
The company said that CEO Satya Nadella had spoken with Trump and that it “fully appreciates the importance of addressing the president’s concerns.”
The post goes on to say that “Microsoft will move quickly to pursue discussions with TikTok’s parent company, ByteDance, in a matter of weeks, and in any event complete these discussions no later than September 15, 2020.”
Microsoft would probably not undertake the entire purchase on its own, and added in its post that it “may invite other American investors to participate on a minority basis in this purchase.”
The housing of data – the primary concern of the Trump administration – will shift to the US, Microsoft said. It added that a preliminary proposal would also involve a purchase of the TikTok service in Canada, Australia, and New Zealand.
While a monumental decision for the US, it remains unclear how TikTok would continue to operate in other markets not covered by the Microsoft takeover such as Europe.
TikTok’s privacy policy currently states that data on American users is stored in the US and in Singapore, with none of the data going into China or being subject to Chinese law. Still, the small print says that data can be shared with ByteDance and third parties.
Things are a bit more murky outside of the US, with the EU privacy policy saying that “the personal data that we collect from you will be transferred to, and stored at, a destination outside of the European Economic Area (“EEA”)” with no specific details.
Following the decision from the UK government to follow Trump’s ban on Huawei 5G equipment, it is likely that the Conservatives will at least discuss taking similar measures.
