The move would be the culmination of U.S. national security concerns over the safety of the personal data that TikTok handles. It would represent a major blow for TikTok’s owner, Beijing-based ByteDance, which became one of only a handful of truly global Chinese conglomerates thanks to the app’s commercial success.
“As far as TikTok is concerned, we are banning them from the United States... I will sign the document tomorrow,” Trump told reporters on Air Force One.
ByteDance and TikTok did not immediately respond to requests for comment.
Reporting by Alexandra Alper in Washington, D.C.; Editing by William Mallard
Microsoft Corp. MSFT 0.54% is in advanced talks to acquire the U.S. operations of the Chinese-owned video app TikTok, according to people with knowledge of the discussions, in a deal that would be a concession to White House pressure and make the software giant a major player in social media.
A sale to Microsoft, likely for billions of dollars, would be a win for both TikTok and its parent company, Bytedance Ltd., where executives had feared that the U.S. government would force device makers to take TikTok out of their app stores, according to another person familiar with the matter.
For the Trump administration, a sale of TikTok would also eliminate potential legal challenges—and public backlash—that could have occurred if the wildly popular app was forced off millions of American smartphones.
A deal could be completed by Monday, according to people familiar with the matter, and the talks involve representatives from Microsoft, Bytedance, and the White House. Talks are fluid, and a deal may not come together.
Bytedance had considered a broader range of options. However, the White House pressured Bytedance to sell TikTok’s U.S. operations to an American company, one of the people said.
A valuation couldn't be learned. It could be tricky to put a price tag on a business that is under pressure from governments around the world but also growing rapidly.
President Trump said on Friday that he was considering taking steps that would effectively ban the app from the U.S.
News of the deal talks, earlier reported by Fox Business, came as the U.S. was concluding a security review that was expected to recommend that Bytedance sell TikTok.
“We’re looking at TikTok. We may be banning TikTok,” Mr. Trump told reporters as he prepared to leave on a trip to Florida. “We may be doing some other things, there are a couple of options.”
U.S. officials have expressed concerns that TikTok could pass on the data it collects from Americans to China’s authoritarian government. TikTok has said it would never do so.
In a statement posted online this week, TikTok CEO Kevin Mayer, who was hired away from Walt Disney Co. earlier this year, said the company was committed to transparency in how it collects and shares data.
“TikTok has become the latest target, but we are not the enemy,” he said.
A Microsoft spokesperson declined to comment.
For the Redmond, Wash., software giant, a TikTok deal would be its splashiest acquisition since its 2016 purchase of LinkedIn for more than $26 billion, and would immediately make it a formidable rival to social-media stalwarts Facebook Inc. and YouTube.
Facebook and YouTube parent Alphabet Inc. would have been likely suitors in years past, but they are facing tough regulatory scrutiny, including over whether their past acquisitions have hindered competition.
TikTok, known for its catchy dancing and lip-syncing videos, has soared in popularity this year amid the pandemic. About 315 million users downloaded TikTok in the first quarter of the year, the most downloads ever for an app in a single quarter, according to research firm Sensor Tower, bringing its total to more than 2.2 billion worldwide.
The U.S. historically has accounted for about a 10th of TikTok users.
In addition to concerns that TikTok could collect data on Americans, U.S. officials have been concerned that the app could be used to spread Chinese propaganda and that the platform’s moderators could be censoring content to appease Beijing.
The review of TikTok has centered around ByteDance’s 2017 acquisition of a similar video-sharing platform called Musical.ly, a Shanghai-based platform that had built a strong U.S. user base. After the acquisition, Musical.ly’s platform was rebranded as TikTok, and users who wanted to share videos could continue to do so on TikTok’s platform.
ByteDance, whose secondary shares have valued the firm at $150 billion in recent weeks, counts big-name U.S. investors such as Coatue Management and Sequoia Capital among its backers.
The Committee on Foreign Investment in the U.S. began its probe into TikTok last year, amid concerns from members of Congress and others about the data it might be collecting.
In a statement Friday, Rep. Michael McCaul (R., Texas) welcomed the possible separation of TikTok from Chinese ownership but said “more must be done across the board to disentangle American consumers from Chinese Communist Party-controlled technology and apps.”
“This isn’t just about the CCP collecting data from unwitting Americans on TikTok or similar apps; they also control the content users see,” Mr. McCaul said.
The U.S. has increasingly focused on deals that put U.S. citizens and their privacy at risk, a focus that Congress ordered in a 2018 law.
Under that law, regulators can investigate deals involving foreign money if that business has access to data on more than one million people, including certain genetic and biometric data, financial data, and health data. The rules also apply to investments in U.S. businesses that track users’ locations or target U.S. military or national security personnel.
The Treasury-led Committee on Foreign Investment in the U.S., or Cfius, is a panel of federal agencies that reviews deals involving foreign money to ensure they don’t put the country’s national security at risk.
Earlier this year, Mr. Trump ordered another Chinese company to sell its stake in a Maryland property-management software firm, a platform that hotels and casinos use to enable guests to check into rooms using smartphones. That order marked the sixth time a U.S. president has either blocked a deal or ordered a corporate selloff since Congress authorized the power to intervene in 1988.
At a Congressional hearing this week on the market power of big tech companies, Facebook Chief Executive Mark Zuckerberg made it clear that he intends to address threats from China—a not-so-veiled reference to TikTok’s rise.
Mr. Mayer, TikTok’s CEO, fired back in a blog post-Wednesday morning, disparaging Facebook’s “copycat” efforts to match TikTok and saying many attacks on the company are “disguised as patriotism.”
Microsoft isn’t the only company interested in buying TikTok’s U.S. operations https://t.co/yEZDzCPhBX
— Bloomberg (@business) August 1, 2020
Donald Trump cast doubt on the idea that TikTok would be sold to an American company https://t.co/DvCr889xAo
— Bloomberg (@business) August 1, 2020
How to tick tack pic.twitter.com/1Mn8nk363f
— Sarah Cooper (@sarahcpr) July 31, 2020