Mi­crosoft to press on with Tiktok deal talks af­ter call with Don­ald Trump

Tech group says po­ten­tial takeover would in­clude app’s US, Cana­dian and Aus­tralian op­er­a­tions

Business Day (Nigeria) - - FINANCIAL TIMES - HAN­NAH MUR­PHY IN SAN FRAN­CISCO AND YUAN YANG IN BEI­JING

Mi­crosoft has said it will press ahead with talks to buy Tiktok’s US op­er­a­tions from the video app’s Chi­nese owner Bytedance de­spite the reser­va­tions of Don­ald Trump, fol­low­ing a con­ver­sa­tion be­tween chief ex­ec­u­tive Satya Nadella and the US pres­i­dent.

The US tech­nol­ogy group also re­vealed that the po­ten­tial trans­ac­tion would in­clude Tiktok’s busi­ness in Canada and its Aus­tralia and New Zealand op­er­a­tions, amid grow­ing scru­tiny of the app glob­ally in­clud­ing by Aus­tralian of­fi­cials.

Zhang Yim­ing, founder of ByteDance, con­firmed it was in “pre­lim­i­nary dis­cus­sions” with a tech com­pany in an in­ter­nal let­ter to staff on Mon­day, but did not iden­tify the suitor and said the “end so­lu­tion” was un­clear.

Mr Zhang also con­firmed that the Com­mit­tee on For­eign In­vest­ment in the United States, the US Trea­suryled body that would have to ap­prove a deal, had or­dered Bytedance to sell Tiktok’s US op­er­a­tions.

Mi­crosoft said in a state­ment on Sun­day that it was “com­mit­ted to ac­quir­ing Tiktok sub­ject to a com­plete se­cu­rity re­view”. It added it “fully ap­pre­ci­ates the im­por­tance of ad­dress­ing” Mr Trump’s con­cerns.

The pres­i­dent said on Fri­day that he in­tended to ban the app on na­tional se­cu­rity grounds and that a pur­chase by any US com­pany, in­clud­ing Mi­crosoft, would not be al­lowed.

The Trump ad­min­is­tra­tion has re­peat­edly raised con­cerns that Chi­nese own­er­ship of Tiktok could put the per­sonal in­for­ma­tion of 100m Amer­i­can users into the hands of the Chi­nese govern­ment.

The state­ment, the first by Mi­crosoft since it emerged the com­pany has been in dis­cus­sions with ByteDance, in­di­cated that Mr Trump may hold off ban­ning the app while the talks con­tinue.

Mi­crosoft added it would “move quickly to pur­sue dis­cus­sions” with a view to com­plet­ing them by Septem­ber 15 at the lat­est.

It said it would en­sure that “all pri­vate data of Tiktok’s Amer­i­can users is trans­ferred to and re­mains in the United States”, and would make sure the data are deleted from servers out­side the coun­try af­ter be­ing trans­ferred.

Mi­crosoft said it had al­ready no­ti­fied Cfius of its in­ter­est in buy­ing the Tiktok ser­vice. Amer­i­can in­vestors may be able to take mi­nor­ity stakes as part of the deal, it said.

It was un­clear how ex­actly Tiktok would di­vest its US arm from its other Euro­pean and Asian op­er­a­tions. Canada, Aus­tralia and New Zealand are part of Tiktok’s US busi­ness unit, ac­cord­ing to two peo­ple with knowl­edge of the sit­u­a­tion.

Last month, Scott Mor­ri­son, Aus­tralia’s prime min­is­ter, said the govern­ment was closely mon­i­tor­ing Tiktok given con­cerns over its data gath­er­ing and se­cu­rity.

China’s for­eign min­istry said on Mon­day the US de­ci­sion “ex­poses the US’S typ­i­cal double stan­dards in pro­tect­ing fair­ness and free­dom, and vi­o­lates the WTO prin­ci­ples of open­ness, trans­parency and nondis­crim­i­na­tion”.

A Mi­crosoft-tiktok tie-up would al­low the US tech com­pany, which has a lim­ited pres­ence in so­cial me­dia, to en­ter a new mar­ket dom­i­nated by ri­vals such as Face­book, Google’s Youtube and Twit­ter.

The two sides have been dis­cussing a trans­ac­tion over the past few weeks, ac­cord­ing to mul­ti­ple peo­ple in­volved, with Mi­crosoft pres­i­dent Brad Smith vis­it­ing of­fi­cials in Wash­ing­ton to see if a takeover would as­suage the US govern­ment’s con­cerns.

But the talks were thrown into un­cer­tainty on Fri­day af­ter Mr Trump vowed to ban the app, say­ing: “We are not an M&A coun­try.”

Some, in­clud­ing Bytedance ex­ec­u­tives, have said they be­lieve Mr Trump’s in­ter­ven­tion was a ne­go­ti­at­ing tac­tic in­tended to com­pel the Chi­nese group to sell the US busi­ness to Mi­crosoft at a lower price than it had been hop­ing for.

Mean­while, sev­eral Repub­li­can se­na­tors have come out pub­licly in favour of an ac­qui­si­tion, in­clud­ing Marco Ru­bio, the Repub­li­can chair­man of the Sen­ate in­tel­li­gence com­mit­tee and a known China hawk. Mr Ru­bio said on Twit­ter on Sun­day that if the com­pany and its data were bought and “se­cured by a trusted US com­pany”, that would be a “pos­i­tive [and] ac­cept­able out­come”.

Bytedance did not com­ment on the Mi­crosoft deal but took a swipe at Face­book, ac­cus­ing the com­pany of “pla­gia­rism and smears” against it. In a state­ment posted on Sun­day night on its news ag­gre­ga­tor app Jinri Toutiao, Bytedance said it would “not stop in­creas­ing our in­vest­ment into all our global mar­kets”.

Tiktok, the White House and the US Trea­sury did not re­spond to re­quests for com­ment.

Ad­di­tional re­port­ing by Aime Wil­liams in Wash­ing­ton DC, Miles Kruppa in San Fran­cisco and Jamie Smyth in Syd­ney

Satya Nadella, Mi­crosoft chief ex­ec­u­tive, spoke with Don­ald Trump af­ter the US pres­i­dent said he did not want the com­pany to ac­quire Tiktok © AP

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