Microsoft is in advanced talks to buy the United States operations of TikTok, the popular Chinese-owned video app that has been a source of national security and censorship concerns, according to a person familiar with the discussions who spoke only on condition of anonymity because of the sensitivity to the negotiations.
The potential deal would be a victory for both companies, making Microsoft Corp. a major player in the social media arena and providing relief to TikTok and its parent company, Bytedance Ltd., a target of President Donald Trump’s.
Trump said Friday that he would take action as soon as Saturday to ban TikTok in the United States. Trump’s comments on Friday aboard Air Force One came after published reports that the administration is planning to order China’s ByteDance to sell TikTok.
“As far as TikTok is concerned, we’re banning them from the United States,” Trump told reporters Friday on Air Force One as he returned from Florida.
Trump said he could use emergency economic powers or an executive order to enforce the action, insisting, “I have that authority.” He added, “It’s going to be signed tomorrow.”
Microsoft declined to comment.
Reports by Bloomberg News and the Wall Street Journal citing anonymous sources said the administration could soon announce a decision ordering ByteDance to divest its ownership in TikTok.
There have been reports of US tech giants and financial firms being interested in buying or investing in TikTok as the Trump administration sets its sights on the app. The New York Times and Fox Business, citing an unidentified source, first reported Friday that Microsoft is in talks to buy TikTok.
TikTok issued a statement Friday saying that, “While we do not comment on rumours or speculation, we are confident in the long-term success of TikTok.”
On Saturday it posted a short video from its US General Manager Vanessa Pappas saying that “We’re not planning on going anywhere.”
ByteDance launched TikTok in 2017, then bought Musical.ly, a video service popular with teens in the U.S. and Europe, and combined the two. A twin service, Douyin, is available for Chinese users.
TikTok’s fun, goofy videos and ease of use has made it immensely popular, and U.S. tech giants like Facebook and Snapchat see it as a competitive threat. It has said it has tens of millions of U.S. users and hundreds of millions globally.
But its Chinese ownership has raised concerns about the censorship of videos, including those critical of the Chinese government, and the potential for sharing user data with Chinese officials.
TikTok maintains it doesn’t censor videos based on topics sensitive to China and it would not give the Chinese government access to U.S. user data even if asked. The company has hired a US CEO, a former top Disney executive, in an attempt to distance itself from its Chinese ownership.
US national-security officials have been reviewing the Musical.ly acquisition in recent months, while US armed forces have banned their employees from installing TikTok on government-issued phones. Secretary of State Mike Pompeo said this month that the U.S. was considering banning TikTok.
These national-security worries parallel a broader US security crackdown on Chinese companies, including telecom providers Huawei and ZTE.
The Trump administration has ordered that the US stop funding equipment from those providers in US networks.
It has also tried to steer allies away from Huawei because of worries about the Chinese government’s access to data, which the company has denied it has.
The Trump administration has stepped in before to block or dissolve deals on national-security concerns, including stopping Singapore’s Broadcom from its $117 billion bid for U.S. chipmaker Qualcomm in 2018 in an effort to help retain US leadership in the telecom space. It also told China’s Beijing Kunlun Tech Co. to sell off its 2016 purchase of gay dating app Grindr.
Other countries are also taking action against TikTok. India this month banned dozens of Chinese apps, including TikTok, citing privacy concerns, amid tensions between the countries.
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The US government’s poor track record in bolstering Americans’ data privacy more broadly lessens its credibility in taking on Chinese-owned companies, according to Susan Ariel Aaronson, a professor at George Washington University and data governance and national-security expert.
The American federal government has not passed broad privacy or data-security legislation despite efforts to do so last year, and the Justice Department has tried to undermine encryption – which makes sure only a sender and receiver can see the content they exchange – for law-enforcement reasons. Tech companies have pushed back against that.
“I continue to be wary of forcing a sale of TikTok without data protection laws they could try to follow,” Alex Stamos, the former chief security officer at Facebook who now studies internet security at Stanford University, tweeted on Friday.
He added that Microsoft “has one of the best child safety teams, which is a larger risk on TikTok right now.”
Microsoft, which owns LinkedIn, is the No. 4 digital ad company in the US, after Google, Facebook and Amazon. Still, buying TikTok would be a significant change of direction from Microsoft CEO Satya Nadella’s focus on workplace software that makes people more productive, said technology industry analyst Patrick Moorhead of Moor Insights & Strategy.
Unlike Google or Facebook, which dominate the digital advertising industry, Microsoft hasn’t been under the intense scrutiny of U.S. politicians and antitrust regulators lately over its market power.
Moorhead said that might make it easier to swoop in and acquire TikTok, which poses a competitive threat to social networks like Facebook, Instagram, Google’s YouTube and Snapchat.
It’s an interesting irony that it was Microsoft at the centre of the landmark antitrust case 20 years ago.
If the deal goes through, “it would definitely make Microsoft a much more competitive advertising system in years to come,” said eMarketer analyst Ross Benes.
Sale uncertain as Trump ban looms: reports
Negotiations for Microsoft to buy the US operations of Chinese-owned TikTok are on hold after President Donald Trump threatened to bar the social media app and came out against the sale, the Wall Street Journal reported Saturday.
Trump has pledged to get tough on the massively popular video-sharing app, which US officials have said could be a tool for Chinese intelligence — a claim the firm, owned by Chinese internet giant ByteDance, has repeatedly denied.
While there has been no sign yet of the ban he threatened on Friday to impose, his words were reportedly already adding to uncertainties for TikTok.
“Before Mr Trump’s remarks, the two sides believed the broad strokes of a deal could be in place by Monday,” the paper reported on a possible TikTok-Microsoft sale, citing unnamed sources.
It also said Trump’s threats and opposition to the deal had prompted TikTok to make further concessions, including adding up to 10,000 jobs in the US over the next three years.
TikTok defended itself on Saturday, with its general manager for the US, Vanessa Pappas, telling users that the company was working to give them “the safest app,” amid US concerns over data security.
“We’re not planning on going anywhere,” Pappas said in a message released on the app.
TikTok, especially popular with young audiences who create and watch its short-form videos, has an estimated one billion users worldwide.
It has grown even faster as the coronavirus pandemic has pushed people physically away from each other, but into close contact online.
Earlier media reports had suggested Trump would require that the app’s US operations be divested from ByteDance, but he instead announced a ban.
Trump’s announcement drew criticism from some in the tech sector, including former Facebook chief security officer Alex Stamos, who questioned whether the move was spurred by national security concerns.
“A 100 percent sale to an American company would have been considered a radical solution two weeks ago and, eventually, mitigates any reasonable data protection concerns,” he wrote on Twitter.
TikTokers employed the apps’ signature short-form videos to poke fun at Trump.
One clip that was liked over 300,000 times shows a young woman stacking bricks and smearing orange paint on her face, apparent digs at the president’s skin tone and controversial pledge to build a wall between the US and Mexico.
“Me trying to convince Trump to let us keep TikTok”, read the text on the post.
– ‘For the long run’ –
The American Civil Liberties Union cried foul over the possibility of a ban on the app.
“Banning an app that millions of Americans use to communicate with each other is a danger to free expression and is technologically impractical,” said the ACLU’s surveillance and cybersecurity counsel, Jennifer Granick.
“With any Internet platform, we should be concerned about the risk that sensitive private data will be funneled to abusive governments, including our own,” Granick said in a statement.
“But shutting one platform down, even if it were legally possible to do so, harms freedom of speech online and does nothing to resolve the broader problem of unjustified government surveillance.”
Pappas said she was “proud” of TikTok’s 1,500 US employees, and also noted the “additional 10,000 jobs” the company plans on creating in the US in the next three years.
“When it comes to safety and security, we’re building the safest app because we know it’s the right thing to do,” she said.
“So we appreciate the support. We’re here for the long run, and continue to share your voice here and let’s stand for TikTok.”
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