Microsoft Considers Acquiring Video Platform TikTok After Talking to the President

After a conversation between President Donald Trump and Microsoft CEO Satya Nadella, the company confirmed they are considering an acquisition of Beijing-based video platform TikTok. The news of a possible acquisition surfaced last week when TechCrunch reported that Trump would order parent company ByteDance to divest itself of TikTok due to security concerns. Trump has reportedly also been considering a ban of TikTok in the United States.

Microsoft confirms an acquisition is possible

In an August 2 blog post, Microsoft said it is prepared to continue exploring a possible purchase of video platform TikTok.

“Microsoft fully appreciates the importance of addressing the President’s concerns. 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,” said Microsoft in the blog post.

“Microsoft will move quickly to pursue discussions with TikTok’s parent company, ByteDance, in a matter of weeks, and in any event completing these discussions no later than September 15, 2020. During this process, Microsoft looks forward to continuing dialogue with the United States Government, including with the President,” the company added.

The process began with a notification from Microsoft and ByteDance to the Committee on Foreign Investment in the U.S. The two companies are exploring an initial proposal that would involve Microsoft’s purchase of the video platform TikTok in the U.S., Canada, Australia and New Zealand. Microsoft disclosed they may invite other American companies or investors to participate in the acquisition with a minority stake.

Security and data protection for users

Microsoft said that, under new corporate ownership, they would build on the popular platform while also ensuring security, privacy and digital safety. Among other precautionary and protective measures, Microsoft would make sure that data of American users would stay in the U.S. Any data that has been stored outside of the country would be transferred to the U.S., and then deleted off servers located in other countries.

“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,” Microsoft added. “Microsoft appreciates the U.S. Government’s and President Trump’s personal involvement as it continues to develop strong security protections for the country.”

Microsoft said that discussions were in the early stages, and they could not guarantee that an acquisition would occur. They said they would not provide updates until a definitive course of action was decided, whether in favor of or against an acquisition.

Other organizations banning TikTok

The United States government is not the only organization with security concerns about TikTok. As we reported last week, on July 10, Amazon employees received an email requiring them to delete TikTok from their phones. A company spokesperson said the message was sent in error. On July 13, CNN reported Wells Fargo also asked employees to delete the app and that the White House is discussing banning the China-based app in the U.S., fearing the Chinese government might get access to user data. India has already banned TikTok, according to TechCrunch.

Business Insider said, in June, India banned TikTok along with 58 other Chinese apps. The Democratic and Republican national committees have asked people not to download TikTok to their personal devices. On the flip side, TikTok said it would like to open a dialogue with companies who want to ban the app from their organizations.

Insider Take

We have so many thoughts on this that we don’t even know where to begin. First, is the president overstepping here? If this is truly a national security concern, technically no, but he has advisors and others in place to do this for him. Second, what does the U.S. Treasury have to do with this? How are they involved? Third, does Microsoft really want to buy TikTok and, if so, what will they do with it?

The Verge suggests that Microsoft could mine the user data for research and other purposes. Microsoft would also own its own social media platform that could compete with Google’s YouTube and Facebook/Instagram. It would also get Microsoft in front of a younger generation of potential customers. This deal, if it goes through, has many layers of complexity from a corporate standpoint as well as a governmental one. We can’t imagine how this will unfold and how Microsoft and other investors might handle, nor how the U.S. government will participate in the process, but we will be eagerly watching as this potential deal progresses. Break out the popcorn! This is going to be quite a ride.