Microsoft given 45 days to secure Tiktok purchase
Trump issues 45-day deadline for bid on U.S. operations as firms work on plan
In a bid to salvage a deal for the U.S. operations of Tiktok, Microsoft Corp. chief executive Satya Nadella spoke with U.S. President Donald Trump by phone about how to secure the administration’s blessing to buy the wildly popular, but besieged, short-form mobile video app.
Microsoft in a blog post Sunday confirmed talks to buy Tiktok’s operations in the U.S., as well as in Canada, Australia and New Zealand, and said it’s aiming to complete the deal no later than Sept. 15.
Trump said on Monday that if a deal is not struck with an American company by that date Tiktok will have to close in the U.S.
The software giant’s public statement follows closed-door discussions with Tiktok and Trump, who floated plans for an outright ban of the app on national security grounds and publicly lambasted the idea of a deal late Friday night.
The companies now have 45 days to hash out a plan acceptable to all parties, a deadline insisted on by the White House, according to people familiar with the matter.
The two companies have not yet worked out key details for a deal, including price, according to people familiar with the matter.
On Monday Trump also said the government will have to be paid a “substantial amount of money” as part of any deal.
“I don’t mind whether it’s Microsoft or someone else, a big company, a secure company, a very American company buys it,” Trump told reporters at the White House.
“It’ll close down on Sept. 15 unless Microsoft or somebody else is able to buy it and work out a deal, an appropriate deal, so the Treasury of the United States gets a lot of money.”
Tiktok has become a flash point among rising U.s.-china tensions in recent months as U.S. politicians raised concerns that parent company Bytedance Ltd. could be compelled to hand over American users’ data to Beijing or use the app to influence the 165 million Americans, and more than two billion users globally, who have downloaded it.
The app also drew ire from the U.S. president after anti-trump activists used the platform to disrupt campaign activities.
In its blog post, Microsoft pledged to add more security, privacy and digital safety protections to the Tiktok app and ensure that all private data of Americans be transferred back to the U.S. and deleted from servers outside the country.
It also said it may invite other American investors to take minority stakes in the company.
“Microsoft fully appreciates the importance of addressing the President’s concerns,” the company said.
“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.”
If a deal goes through, it would mark a dramatic intervention by the U.S. government in private enterprise and alter the global technology landscape.
It would hand Microsoft a much more prominent role in social media and online advertising — and threaten to end an era of globalization in the tech industry.
The blog post from Microsoft came after a weekend of tense negotiations that lasted late into the night among Microsoft, Tiktok and the White House, as well as a string of appearances on Sunday morning cable shows by U.S. politicians trying to sway the president’s decision.
Factions within the administration and Congress have split into two camps: Those that want to keep the wildly popular music video app in operation by delivering it into the arms of an American company, and those that want to ban the app altogether in the U.S. because of Tiktok’s Chinese roots.
The latter would send a message to China that the U.S. too can block internet companies from operating on its shores like China does with Facebook, Twitter and Google.
Tiktok was launched in the U.S. more than two years ago, following Bytedance’s 2017 purchase of lip-synching app Musical.ly, which it folded into Tiktok.
The app became a social-media hit in the U.S — the first Chinese platform to make such inroads.
As Tiktok surged to popularity, officials began calling for a national security investigation into the app.
In November 2019, the Committee on Foreign Investment in the United States, or CFIUS, which investigates overseas acquisitions of U.S. businesses, opened a review
of the Musical.ly purchase. Tiktok has repeatedly rejected accusations that it feeds user data to China or is beholden to Beijing, even though Bytedance is based there.
It spent months trying to distance itself from its Chinese roots.
It hired its first American CEO in June, former Walt Disney Co. executive Kevin Mayer, as well as dozens of D.C. lobbyists.
It announced plans for a new global headquarters outside of China and said it was considering other organizational changes to satisfy U.S. authorities.
After the coronavirus pandemic strained relations between the U.S. and China further, the anti-tiktok rhetoric grew louder.
In June, Secretary of State Mike Pompeo and Trump both floated a possible ban of the app, suggesting there could be real action behind the China hawks’ words.
In response, Bytedance’s venture investors, including Sequoia Capital, urged company founder and chief executive Zhang Yiming to head off any U.S. government action by selling a majority stake in Tiktok to them, people familiar with the matter told Bloomberg News in July.
At first, Zhang was reticent to give up control, but Bytedance feared an outright ban in the U.S. and the loss of a multi-billion business, according to people familiar with the deliberations. India instituted a ban on Tiktok, which quickly devastated its business there.
Zhang relented and got on board with selling a majority stake to U.S. investors, but it turned out that arrangement wasn’t sufficient.
Administration officials didn’t want to leave the company’s Chinese founder with even a minority stake or for Bytedance’s longtime venture capital allies to have a majority stake in the company, these people said.
Meanwhile, Microsoft and Tiktok began preliminary deal discussions.
Talks beginning in July involved Nadella, Microsoft chief financial officer Amy Hood and president and chief legal officer Brad Smith, the people said.
Erich Andersen, Tiktok’s general counsel — who spent 25 years at Microsoft, including working for Smith before joining Tiktok this year — was also involved in the conversations.
(Microsoft) is committed to acquiring Tiktok subject to a complete security review.