What you need to know
- Microsoft may be trying to buy all of TikTok's global business, and not just select markets as previously reported.
- The Trump administration is rumored to be preparing an order that would compel Chinese company ByteDance to divest the U.S. portion of TikTok.
- Microsoft is reportedly in talks to buy the app from ByteDance.
- There's no word on when a sale might be final, though a September 15th deadline has been set by the Trump administration.
Update #6 August 6 (10:45PM ET) — Trump orders restrictions on TikTok, WeChat
The Trump administration is ratcheting up pressure on China. According to The New York Times, Trump has announced "sweeping restrictions" on TikTok and WeChat (a popular messaging app owned by Tencent).
The twin orders take effect in 45 days and cite national security concerns as the impetus. According to the Times, the orders will "bar any transactions with WeChat or TikTok by any person or involving any property subject to the jurisdiction of the United States."
"The spread in the United States of mobile applications developed and owned by companies in the People's Republic of China (China) continues to threaten the national security, foreign policy, and economy of the United States," the executive order said about ByteDance.
"Like TikTok, WeChat automatically captures vast swaths of information from its users. This data collection threatens to allow the Chinese Communist Party access to Americans' personal and proprietary information," the second one noted about WeChat.
Interestingly, the order for TikTok excluded "any contract entered into before the 45 days elapse." That suggests that TikTok and Microsoft may still be on safe ground to continue talks, which have a September 15th deadline for completion. Full details about the scope of the ban are still unclear.
Update #5 August 6 — Microsoft wants it all?
According to a new report in the Financial Times and five sources "with knowledge of the talks" Microsoft is looking to buy all of TikTok's global business. Previously, just US., Canada, Australia, and New Zealand markets were being considered. The new deal would expand to Europe and India (where TikTok was recently banned), but not China, where ByteDance operates under the Douyin-brand.
Update #4: 8/3/2020: President Trump said on Monday "he does not mind if Microsoft Corp buys the Chinese-owned short-video app TikTok," so long as the deal is done by September 15th. This remark clears the path for the purchase to go through without controversy.
Update #3 8/2/2020: Microsoft has now officially confirmed it is exploring the purchase of Tiktok, and talks have now resumed following discussions with the Trump administration.
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 fully appreciates the importance of addressing the President's concerns. It 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.
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.
Update #2 8/1/2020 8PM ET: The Wall Street Journal is reporting that talks between Microsoft and TikTok are on hold due to Trump's comments on Air Force One Friday night.
Update 8/1/2020: Late last night, President Trump signaled he would outright ban TikTok from operating in the US. Since then, ByteDance has stated it is willing to 'divest' its stake in TikTok's US operations. Microsoft is still considered to be the US company to take over services. However, it is not known if the US administration accepts ByteDance's new offer.
The Trump administration is reportedly considering an order that would force Chinese company ByteDance to divest its ownership of popular app TikTok in the U.S. Fox Business Network's Charles Gasparino reports that U.S. companies are in talks to buy TikTok, with Microsoft's name in the mix.
According to a report from Bloomberg, the Trump administration could hand down its order "as soon as Friday."
In a follow-up tweet, Gasparino elaborated that Microsoft "is probably the only big US tech co that can do the deal since the others are probably prohibited from getting bigger by regulators," according to "bankers with knowledge of the matter."
The order would come after concerns from U.S. lawmakers about the ability for the Chinese government to use TikTok to obtain data on American citizens. TikTok is owned by ByteDance following its merger with Musical.ly in 2017. As Bloomberg notes, President Trump has mulled banning TikTok in retaliation for China's handling of the coronavirus outbreak.
TikTok has been looking for ways to distance itself from its Chinese ownership, seeking to reassure the public that no data is stored on servers in China and that the app operates independently. Bytedance even appointed a CEO formerly of Walt Disney Co, Kevin Mayer, to run its operations in America.
There's no word on when a sale may emerge. However, we could learn more as soon as today. As always, it's also worth taking rumors like these with an appropriately large grain of salt.
We'll update this post with more information as it becomes available.
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