Microsoft is exploring an acquisition of TikTok’s operations in the U.S.

1 Aug, 2020 04:30
source: Singularity Financial

Singularity Financial Hong Kong August 1, 2020 – Microsoft Corp. is exploring an acquisition of TikTok’s operations in the U.S., according to a person familiar with the matter. A deal would give the software company a popular social-media site and relieve U.S. government pressure on the Chinese owner of the video-sharing app.

The Trump administration has been weighing whether to direct China-based ByteDance Ltd. to divest its stake in TikTok’s U.S. operations, according to several people familiar with the matter. The U.S. has been investigating potential national security risks due to the Chinese company’s control of the app.

While the administration was prepared to announce an order as soon as on Friday, according to three people familiar with the matter, another person said later that the decision was on hold, pending further review by President Donald Trump. All of the people spoke on condition of anonymity because the deliberations are private.

Microsoft is in talks to purchase TikTok’s U.S. operations, according to the person who asked not to be identified because the discussions are private. Spokespeople for Microsoft and TikTok declined to comment. The software company’s interest in the app was reported earlier by Fox Business News.

Any transaction will face many regulatory hurdles. In recent years, the Committee on Foreign Investment in the U.S., which investigates overseas acquisitions of U.S. businesses, has taken a much more aggressive role in reviewing and approving deals that may threaten national security.

A purchase of TikTok would represent a huge coup for Microsoft, which would gain a popular consumer app that has won over young people with a steady diet of dance videos, lip-syncing clips and viral memes. Microsoft has dabbled in social-media investments in the past, but has never developed a popular service of its own in this lucrative sector.

TikTok has repeatedly rejected accusations that it feeds user data to China or is beholden to Beijing, even though ByteDance is based there. TikTok now has a U.S.-based chief executive officer and ByteDance has considered making other organizational changes to satisfy U.S. authorities.

On Thursday, U.S. Senators Josh Hawley, a Missouri Republican, and Richard Blumenthal, a Connecticut Democrat, wrote the Justice Department asking for an investigation of whether TikTok has violated the constitutional rights of Americans by sharing private information with the Chinese government.

A deal with Microsoft could potentially help extract ByteDance from the political war between the U.S. and China.