White House official raises fresh doubts about future of TikTok
Adviser claims conflict because CCP uses Microsoft’s software
WHITE House adviser Peter Navarro has told CNN that Microsoft might not be the right company to buy TikTok’s US operations, because of the US technology giant’s existing business in China.
“This is not a white hat company,” Navarro says, claiming the Chinese Communist Party uses Microsoft software, a potential conflict, and asks whether TikTok in the US should be “simply banned” rather than sold.
A race to sell Chinese-owned TikTok before it is banned by the US is the most high-profile case yet of company-level fallout from the widening gulf between the two countries.
Mr Navarro declined to say whether he is advising President Trump against Microsoft’s
bid to purchase TikTok.
Meanwhile, the potential deal for Microsoft to buy TikTok’s US operations provoked an outcry yesterday on Chinese social media as well as criticism from a prominent Chinese investor in TikTok owner ByteDance.
The US tech giant formally declared its interest on Sunday after President Trump, – who has cited national security risks posed by the Chinese-owned short video app – reversed course on a planned ban and gave the two firms 45 days to come to a deal.
The proposed acquisition of parts of TikTok, which boasts 100 million US users, would offer Microsoft a rare opportunity to become a major competitor to social media giants such as Facebook and Snap.
Shares in Microsoft, which owns the business social media network LinkedIn and is also seeking to buy TikTok’s Canadian, Australian and New Zealand interests, rose nearly 3pc in early trades yesterday.
ByteDance has not publicly confirmed the sale talks. But in an internal letter to staff yesterday, the company’s founder and CEO Zhang Yiming said the firm had started talks with a tech company it did not identify to clear the way “for us to continue offering the TikTok app in the US”.
Clinching a deal that will satisfy all parties and potentially act as a lightning rod for US-China relations will be a tall order.
People close to the situation have told Reuters that all of TikTok could be worth $50bn (€42.5bn), but the forced sale of the US division and some other units alone will likely yield much less than that.
“A forced deal under Washington’s shotgun could open up for endless litigations if it should result [in] an unfavourable outcome to existing private shareholders,” said Fred Hu, chairman of Primavera Capital Group, an investor in ByteDance and one of China’s best known private equity groups.
Mr Hu said Microsoft was a credible buyer but questioned how selling large parts of TikTok’s operations at an early stage of its growth could ever be a good deal for ByteDance.
“It absolutely makes no sense. Bytedance is an innocent victim of the mad politics and mad geopolitics,” he said. “It is a sad outcome for Bytedance, for entrepreneurial capitalism, and for the future of global commerce.”
“This is not a standard M&A situation, this is hard to predict,” said one senior banker with a US bank in Hong Kong, saying that it would be a question of how to structure a deal in a way that would keep Washington happy.
U-turn: Donald Trump gave the firms 45 days to come to a deal