Microsoft works with government in bid to buy TikTok in the U.S.

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Microsoft works with government in bid to buy TikTok in the U.S.

By Dan Berthiaume - 08/03/2020

Microsoft is in direct contact with President Trump as it negotiates to buy the business of a popular – and controversial – Chinese social media platform in the U.S.

In a corporate blog post, Microsoft announced that following a conversation between CEO Satya Nadella and President Trump, it is prepared to continue discussions to explore a purchase of TikTok in the U.S.

TikTok, a short-video-sharing social network owned by Chinese entertainment company ByteDance was the highest new entry in the 2020 BrandZ Top 100 Most Valuable Global Brands ranking, taking the no. 79 spot with brand value of $16.9 billion.

U.S. Secretary of State Mike Pompeo has publicly warned American users of the app that their personal information could wind up in the hands of Chinese Communist Party. The Trump administration is considering banning TikTok in the U.S. Meanwhile, TikTok has said data from American users is stored in servers based in the U.S. and Singapore and that its data centers are not located within China. 

Amazon sent an internal email informing employees they had to remove the TikTok app from any mobile device with access to Amazon corporate email by end of the day Friday, July 10, but then rescinded that order. Major U.S. retailers including Walmart, Old Navy, and Kroger have used TikTok as a marketing platform to reach younger consumers.

According to Microsoft, it intends to complete discussions with ByteDance no later than Sept. 15, 2020, and will only acquire TikTok subject to a complete security review and if the purchase provides “proper economic benefits” to the U.S., including the U.S. Treasury. Microsoft said it will continue a dialogue with the government, including the president, during negotiations.

The discussions with ByteDance follow a notification made by Microsoft and ByteDance to the Committee on Foreign Investment in the United States (CFIUS). The two companies provided notice of their intent to explore a preliminary proposal that would involve a purchase of the TikTok service in the U.S., Canada, Australia, and New Zealand, and would result in Microsoft owning and operating TikTok in these markets. Microsoft says it may invite other American investors to participate on a minority basis in this purchase.

“This new structure would build on the experience TikTok users currently love, while adding world-class security, privacy, and digital safety protections,” Microsoft said in the blog post. “The operating model for the service would be built to ensure transparency to users as well as appropriate security oversight by governments in these countries.”

Among other measures, Microsoft says it would ensure that all private data of TikTok’s American users is transferred to and remains in the U.S. That data would also be deleted from servers outside the country after it is transferred.

Microsoft cautions these discussions are preliminary and there is no assurance that a transaction which involves Microsoft will proceed. The company does not intend to provide further updates until there is a definitive outcome to the discussions.