US President Donald Trump has given 45 days to Microsoft Corp to complete the negotiations over the acquisitions of Chinese short-video app TikTok, said a Reuter’s report. Recently, Trump announced that his administration might ban TikTok. It is believed that the move came in the backdrop of stalled trade and escalated tensions between the United States and China. Covid-19 pandemic only fired up the tension between the two nations further.
TikTok claims that the app has around 100 million users in the US. If Microsoft manages to acquire the app, it will have a rare opportunity to stand in the competition with social media giants like Facebook and Snap. Though Microsoft owns a social media network LinkedIn, it is more of a social media platform for professionals.
Microsoft-Trump meeting delayed the ban
On Friday, Trump dismissed the idea of selling a major share of TikTok to Microsoft. However, Microsoft CEO Satya Nadella discussed the issue with Trump that controlled the situation for a while. Microsoft, in its blog, said, “Following a conversation between Microsoft CEO Satya Nadella and President Donald J. Trump, Microsoft is prepared to continue discussions to explore a purchase of TikTok in the United States.”
Microsoft further added that they would move quickly to discuss the matter with ByteDance, the parent company of TikTok. The discussions should be complete no later than 15th September 2020, which is the deadline provided by Trump. Microsoft will continue the discussion with the United States Government in the matter as well.
The preliminary proposal submitted by the two companies to the Committee on Foreign Investment in the United States (CFIUS) involves a purchase of the TikTok services in the US, Australia, Canada and New Zealand. If the deal finalizes, Microsoft will own the operations in the said markets. Microsoft said in the post that they might invite other investors from America to buy a share on a minority basis.
Users can expect better privacy options
The purchase, according to Microsoft, will lead to a better app experience in terms of privacy, security and digital safety. The operation model will provide transparency to the users and appropriate security agencies of the governments of the said countries. Microsoft will ensure that the users’ data from these countries get shifted to the US and remains here only. Once the data is transferred to the US, it will be deleted from the servers outside the US.
Reuters said in its report that Trump changed his mind about banning the app after members of his Republican party advised against the plan. They said that banning TikTok may hurt his election campaign as the app is immensely popular among young voters. The US presidential elections are scheduled for November this year. The ban may also trigger a series of legal challenges that the US administration under Trump should rather avoid amid upcoming elections.
Republican Senator Lindsey Graham thanked Trump in a tweet. He said, “Thank you, President Trump, for protecting American consumers from the Chinese Communist Party and bringing jobs back to the US. A win-win in the making.”
China blamed the US for witch-hunt
China Daily, a state-backed newspaper on Monday said that ByteDance had become a victim of a “witch hunt” from the US. The paper mentioned in its article that Washington failed to provide any evidence to support the allegations that TikTok posed a threat to national security.
The main issue in the deal will be separating TikTok’s technology from the infrastructure owned by ByteDance to dilute the security concerns raised by the US in connection with the personal data. There is a chance that the US government may give Microsoft and ByteDance some time to complete the transition and develop technology for TikTok that will detach it from ByteDance.
Some reports suggest that the valuation expectations for the app are more than $50 billion, but the US is building pressure for a lower price tag. As of now, according to Microsoft’s statement, these discussions are preliminary. There is no assurance that the deal involving Microsoft will materialize. The company will provide any further updates only after a definitive outcome to the discussions.