TikTok found itself in hot water after President Trump expressed concerns about the app collecting data on American citizens and the threat that poses to national security. Owner ByteDance has so far been unsuccessful in working out a deal with the US government so an alternative solution is proposed – Microsoft could acquire TikTok.
The software giant officially confirmed that CEO Satya Nadella has been in talks with the President as well as ByteDance. Microsoft “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.”
The talks with ByteDance will be completed by September 15 of this year, one way or another. If Microsoft strikes a deal, it will acquire TikTok operations in select markets and may invite other US investors to take on a minority share.
Note that the company is only looking to run TikTok services in the United States, Canada, Australia and New Zealand. ByteDance will continue operating the social network in the remaining markets.
Microsoft will ensure that the private data of American users is transferred to the US. The company is also committed to offering security oversight to the local governments.
TikTok’s US arm alone is valued between $15 and $30 billion. This will be a major get for the company as Microsoft’s other social networking attempt, streaming platform Mixer, was recently sent to the great server farm in the sky (this after signing multi-million dollar contracts with popular streamers to lure them away from Twitch).
Microsoft will move quickly to pursue discussions with TikTok’s parent company, ByteDance, in a matter of weeks, and in any event completing these discussions no later than September 15, 2020. During this process, Microsoft looks forward to continuing dialogue with the United States Government, including with the President.
The discussions with ByteDance will build upon a notification made by Microsoft and ByteDance to the Committee on Foreign Investment in the United States (CFIUS). The two companies have provided notice of their intent to explore a preliminary proposal that would involve a purchase of the TikTok service in the United States, Canada, Australia, and New Zealand and would result in Microsoft owning and operating TikTok in these markets. Microsoft 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. 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 would ensure that all private data of TikTok’s American users is transferred to and remains in the United States. To the extent that any such data is currently stored or backed-up outside the United States, Microsoft would ensure that this data is deleted from servers outside the country after it is transferred.
Microsoft appreciates the U.S. Government’s and President Trump’s personal involvement as it continues to develop strong security protections for the country.
These discussions are preliminary and there can be no assurance that a transaction which involves Microsoft will proceed. We do not intend to provide further updates until there is a definitive outcome to our discussions.
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