Microsoft may pay up to $30bn to acquire TikTok’s US business in next three weeks
Microsoft could pay between $10 billion (Dh36.7bn) and $30bn to buy TikTok’s US business.
The world’s second-most valuable technology c ompany plans to wrap up talks with the social media app’s parent company ByteDance in the next three weeks, meeting a September 15 deadline set by President Donald Trump, CNBC reported.
US Treasury Secretary Steve Mnuchin is “deeply involved” in the process and Microsoft has pledged to bring TikTok’s back-end and engineering code – which are mainly housed at ByteDance’s Beijing headquarters – to the US within a year.
“Very few American companies have the bandwidth to transfer large amounts of data over to their own systems within a year ... let alone afford the billions TikTok will cost,” the news channel reported.
“Microsoft could likely transfer TikTok’s software code, which could be up to 15 million lines of artificial intelligence, helping cement its position as the leading contender to acquire the company.”
If successful, the acquisition would result in Microsoft owning and operating TikTok’s operations in the US, Canada, Australia and New Zealand.
It is also expected to invite other US investors to take part in the deal as minority stakeholders.
TikTok, which is popular with young people for its short-form videos, has about a billion users worldwide and is available in 140 countries.
The platform is valued at $50bn, about 50 times its projected revenue of about $1bn this year, according to Reuters.
Its competitor, Snap, is valued at about $33bn or 15 times its estimated 2020 revenue, according to data provider Refinitiv.
Mr Trump last week said he planned to ban TikTok in the US after American officials and politicians expressed security concerns that it was being used by Beijing for nefarious purposes.
However, TikTok has denied having any links to the Chinese government.
Microsoft revealed on Sunday
that it would press on with the negotiations to acquire TikTok after its chief executive Satya Nadella held talks with Mr Trump.
Mr Trump has repeatedly insisted that the US Treasury should receive a cut from the deal – an unprecedented move.
The grounds for extracting such a payout, which is the equivalent of what investment banks and private equity companies call a finder’s fee, remain unclear.
TikTok was launched in China in 2016 and released in the US two years a go after ByteDance’s purchase of app Musical.ly.
The Committee on Foreign Investment in the US has been reviewing the purchase of Musical.ly, which was later folded into TikTok.
TikTok said it had hired about 1,000 people in the US this year and plans to hire another 10,000.