Microsoft in Talks to Acquire TikTok
Microsoft is in the works of acquiring TikTok, the widely used video-sharing app. This would mean divorcing TikTok from its parent company, ByteDance.
People with knowledge of the talks told in various news reports that as TikTok is under scrutiny from the Trump administration, it has discussed with Microsoft and other companies about getting bought out to avoid harsh actions.
It is, however, still unclear if Microsoft will succeed in taking over the app as the talks are facing several hurdles.
Microsoft is not the only company that wants to get TikTok under its wing. Other parties have also expressed intent in buying TikTok, but the process is still in its first stages, said a Financial Times report.
According to New York Times, the Committee on Foreign Investment in the United States (Cfius) has been looking into the 2017 purchase done by ByteDance of the Musical.ly app that later on morphed into TikTok.
The committee had come to a decision that orders the parent company to cut ties with TikTok and the government is going through negotiations over the terms of the separation.
Where is the scrutiny coming from?
According to NPR, the Chinese company ByteDance is worth $100 billion. White House officials have seen TikTok as a medium that posed national security threats because it is Chinese-owned.
It is quite a surprise that companies are interested in taking over the app even though both TikTok and ByteDance are under scrutiny for its data-sharing practices.
President Donald Trump implied in his re-election campaign ads that there is possible spying of the Chinese on American users. The president on Friday said he was looking at some options for TikTok and the issues it faces. One of the options includes a ban. "We are looking at a lot of alternatives with respect to TikTok," he said.
The White House is also considering placing ByteDance on the "entity list" that will bar it from being involved with businesses or companies in the United States.
On Friday, Treasury Secretary Steven Mnuchin, who leads the Committee on Foreign Investment in the United States (CFIUS), briefed the president on the plans of the company to divest. However, it remains unclear if the president will do any actions on the matter.
Some concerns are that the U.S. would apply a divestment order to all of TikTok's U.S. operations and whether the actions will have a big impact on the app's global business.
Discussions are set to continue into this weekend. But there have been reports of the president leaning towards a U.S.-based acquisition of TikTok, meaning an American company will buy the U.S. operations of the app.
What happens if Microsoft is successful?
If Microsoft gets to buy TikTok, it will give the tech giant a great ownership to one of the most famous social media platforms today. It is favored by many young digital users and is coveted by all of Silicon Valley.
For months, TikTok has been the go-to app for teen and millennials to showcase and spread comedy skits and dance challenges. Even political activism has found its way into the app.
Since the pandemic started, TikTok had been very well-liked worldwide, with more than 180 million downloads in the U.S. alone, said research firm Sensor Tower.
TikTok did not address the president's comments or any deal talks in a statement released lately. But a spokesperson said the app was confident it will have long-term success and that it was committed to ensuring safety and privacy of its users.
The fears that the social media app faces will likely go away once it has been acquired by a non-China based entity.
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