Updated: August 8, 2020 10:18:29 am
Is Microsoft buying TikTok’s US operations or not? Well, there’s a lot of confusion going on around the most talked-about deal since the last week. The new report coming from the Financial Times adds to the confusion as it stated that US-based Microsoft is now looking beyond just taking a slice of TikTok’s United States business. The company wants to buy the whole of TikTok’s operations, the report stated.
The talks around Microsoft-TikTok deal began after the President of US Donald Trump announced to ban the app if it is not sold to an American company. Last week, Trump said, “It’s got to be an American company… it’s got to be owned here.” He also said, “We don’t want to have any problem with security.”
President Trump has given TikTok time until September 20 as he extends the deadline by five days from September 15. Failing to follow the order will lead to a ban on Tiktok in the United States as well.
The government of India banned the ByteDance owned short video platform a little over a month ago alongside 105 other Chinese apps like Shareit, CamScanner, among others. TikTok is unavailable in India but with the Microsoft deal in the works we can expect the app to return and begin functioning in the country, yet again.
So, what’s happening at Microsoft right now? Is the tech giant looking to just acquire the US operations of TikTok or global as well? We explain the Microsoft-TikTok deal in 10 points and highlight all the latest developments.
1) As per a report from Financial Times, Microsoft is looking beyond just TikTok’s US operations. It stated Microsoft wants to add more markets to the deal including India and Europe – that occupies the majority of TikTok’s revenue, however, there’s no confirmation on the same as of yet from either Microsoft or ByteDance.
2) Meanwhile, another report from Business Insider rubbishes the claims of Microsoft buying TikTok’s global business and said it’s “completely false”. Neither of the reports cites people willing to talk about the business deal.
3) In the initial stage, Microsoft showed its interest in buying TikTok’s US, Canada, Australia, and New Zealand operations. Soon after President Trump announced to ban TikTok if not sold to an American company, Microsoft showed interest in acquiring its US operations. Reports suggest that the deal is still in the “preliminary stage” right now.
4) Microsoft buying the global operations of TikTok would make more sense than just acquiring a small slice of the cake. This is because for the first time a social media network will be split on regional grounds and that will not just be difficult for ByteDance but also Microsoft. Buying just a part of TikTok will lead to several investments and revenue challenges for the two tech giants.
5) The majority of TikTok users are in Asia or Europe and not in the markets Microsoft is looking to buy. This means that the regional acquisition of TikTok’s operation makes less sense for Microsoft. Trump’s worry will be met though as he highlights data security issues every time he talks about TikTok. Despite several clarifications from ByteDance, Trump believes TikTok collects user data from sends them to the Chinese government.
6) Trump cites national security concerns as a reason to ban TikTok in the US. He has provided time till September 20 to the Chinese company to sell its US operations to an American firm. Only then would Trump allow TikTok to operate in the US, otherwise it will face a ban similar to India.
7) Meanwhile, Donald Trump has issued two executive orders against TikTok and messaging app WeChat citing national security concerns. The orders prohibit any US-based company or citizen from transacting with ByteDance and WeChat. The orders take effect in 45 days.
8) The order, however, will not affect a deal if any other company wants to buy TikTok before the set 45 days time limit. As per ABC News, in the executive order, Trump noted, “TikTok automatically captures vast swaths of information from its users, including Internet and other network activity information such as location data and browsing and search histories. This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information — potentially allowing China to track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage.” As per the order, TikTok has been downloaded 175 million times in the US.
9) Trump has also said that the US should get a portion of the TikTok sale. “I told Microsoft, and frankly others if they want to do it, if they make a deal for TikTok — whether it’s the 30% in the United States or the whole company — I say it’s OK, but if you do that, we’re really making it possible, because we’re letting you operate here,” Trump said. “So the United States Treasury would have to benefit also,” he added.
10) TikTok responds to Trump’s executive order and said, “We are shocked by the recent Executive Order, which was issued without any due process. For nearly a year, we have sought to engage with the US government in good faith to provide a constructive solution to the concerns that have been expressed. What we encountered instead was that the Administration paid no attention to facts, dictated terms of an agreement without going through standard legal processes, and tried to insert itself into negotiations between private businesses.” Read full statement here.
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