Microsoft broke its silence on its interest in acquiring hit social video app TikTok in the United States in a statement Sunday afternoon, confirming the talks and saying it’s prepared to continue exploring a deal after a conversation between Microsoft CEO Satya Nadella and President Donald Trump.
The company acknowledged Trump’s concerns that TikTok’s China-based parent company, ByteDance, could be sharing information about users with the Chinese government, and said it would address the issue as part of the process. ByteDance and TikTok have denied the allegations.
“Microsoft fully appreciates the importance of addressing the President’s concerns,” Microsoft said in its statement. “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.”
It’s a sudden reversal from Friday evening, when Trump told reporters that he was preparing to ban TikTok in the U.S., and said he didn’t support a sale to Microsoft.
Microsoft says it’s negotiating the purchase of TikTok’s service in the U.S., Canada, Australia, and New Zealand, planning to own and operate the service in those markets if it can reach a deal with ByteDance. The company set a Sept. 15 deadline for the deal, and said it “may invite other American investors to participate on a minority basis in this purchase.”
“This new structure would build on the experience TikTok users currently love, while adding world-class security, privacy, and digital safety protections,” Microsoft said. “The operating model for the service would be built to ensure transparency to users as well as appropriate security oversight by governments in these countries.”
The statement continued, “Among other measures, Microsoft would ensure that all private data of TikTok’s American users is transferred to and remains in the United States. To the extent that any such data is currently stored or backed-up outside the United States, Microsoft would ensure that this data is deleted from servers outside the country after it is transferred.”
Microsoft cautioned that the talks are preliminary, said there’s no guarantee of a deal, and said it doesn’t plan to provide further updates until there’s a definitive outcome. The potential deal goes against the recent trend at Microsoft toward focusing on its core business-oriented apps and services.
The Wall Street Journal reported Sunday that Bytedance CEO Zhang Yiming, who worked at Microsoft before starting Bytedance, “zeroed in on Microsoft” as a potential acquirer amid negotiations with U.S. government officials. It reported that ByteDance originally offered to create an independent TikTok board and have U.S. investors own a majority of TikTok, but some in the Trump administration wanted the app to be fully American-owned.
Following Trump’s comments on Friday evening, several political advisors urged the president to allow a sale of TikTok versus shutting it down in the U.S., The New York Times reported.
Sen. Lindsey Graham tweeted Sunday that Microsoft’s announcement was a “positive development.” He previously shared his support for a Microsoft takeover.
What’s the right answer?
Have an American company like Microsoft take over TikTok.
Keeps competition alive and data out of the hands of the Chinese Communist Party.
— Lindsey Graham (@LindseyGrahamSC) August 1, 2020
On Monday, Senate minority leader Chuck Schumer added his support to the deal, making it a rare bipartisan issue.
A US company should buy TikTok so everyone can keep using it and your data is safe.
This is about privacy. With TikTok in China, it’s subject to Chinese Communist Party laws that may require handing over data to their government.
A safe way must be found for TikTok to continue.
— Chuck Schumer (@SenSchumer) August 3, 2020
Before Microsoft published its blog post, TikTok on Sunday accused Facebook of “plagiarism and smear” in its own separate statement, CNBC reported.