US president Donald Trump has given Microsoft a go-ahead in its negotiations with ByteDance, to acquire popular short-video app TikTok – if the deal is completed in the next six weeks.
Talks between Microsoft and the TikTok parent company, reported to be at an advanced stage, came to a halt this weekend when Trump threatened to ban TikTok from operating in the US, as tensions rise between America and China.
Trump and his administration raised national security issues, alleging the Chinese-owned company will share sensitive user data with the Chinese government.
“As far as TikTok is concerned, we’re banning them from the United States,” Trump told reporters on Saturday, adding he was ready to sign a document to order the ban “as early as today”.
However, according to a report by Reuters, Trump has now made a U-turn on his decision, prompting Microsoft to declare its interest in the short-video app, and providing the deal with a 45-day deadline.
The decision comes after pressure from some of Trump’s advisers and many in his Republican party, who warned that banning TikTok would not only trigger a wave of legal challenges but that it would estrange many of the app’s young users ahead of the US presidential election, which is expected to take place in November.
Several prominent Republican lawmakers had over the weekend written statements urging Trump to back the sale of the US arm of TikTok to Microsoft.
Microsoft is rumoured to be proposing to fork out as much as $5 billion for TikTok America.
In a media statement released yesterday, Microsoft said following a conversation between its CEO Satya Nadella and Trump, the tech giant is prepared to continue discussions to explore the purchase of TikTok in the US.
“Microsoft is committed to acquiring TikTok, subject to a complete security review and providing proper economic benefits to the US, including the United States Treasury,” according to the statement.
“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 15 September 2020. During this process, Microsoft looks forward to continuing dialogue with the US 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 US.
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 US, Canada, Australia and New Zealand, and would result in Microsoft owning and operating TikTok in these markets, adds Microsoft.
“Among other measures, Microsoft will ensure that all private data of TikTok’s American users is transferred to and remains in the US. To the extent that any such data is currently stored or backed-up outside the US, Microsoft would ensure that this data is deleted from servers outside the country after it is transferred,” said Microsoft in the statement.
Microsoft top line benefits
Launched by Beijing-based company ByteDance in 2017, TikTok gives users as young as 13 the opportunity to share 60-second short videos with friends, family or the entire world.
Together with its Chinese version, Douyin, the popular video-sharing social networking app has reached 1.5 billion downloads globally, making it the seventh-most downloaded app of the 2010s.
With an estimated 100 million US users, the triple-digit acceleration of TikTok’s user base could significantly boost Microsoft’s top line.
Industry insiders believe the proposed acquisition of the app would offer Microsoft an opportunity to become a major contender with its social media competitors such as Facebook and Snap.
This after its $26.2 billion acquisition of professional social media network LinkedIn in 2016 reaped minimal financial rewards for the tech giant.
Despite warnings that it is a breeding ground for predators, TikTok has taken South Africa's social media space by storm, garnering an estimated five million users.
The South African Social Media Landscape 2020 report, released in June by World Wide Worx and Ornico, notes that in less than two years of making its local debut, numerous TikTok creators have attracted thousands of followers.
A TikTok spokesperson quoted in the report believes there is enormous potential for TikTok in SA to become the preferred platform for creative expression. “We are looking forward to continuing the momentum by creating a fun, positive and joyful experience through short videos for our users.
“TikTok's user profile in South Africa is as diverse as the platform and the country itself. The content explored and loved by local audiences at TikTok includes comedy, talent, food, dance, music, travel, to name a few.”
Share