Microsoft has posted a statement today on its corporate blog that says it will continue discussions on a potential TikTok purchase in the U.S.. As a part of the statement, it says that it may invite other “American investors” to participate on a minority basis.
The company says that this is a result of conversations between CEO Satya Nadella and President Trump. That is, basically, the ‘news’ here. Previous reports and our own digging pointed to the situation being totally in the hands of the White House, with Microsoft willing to make the buy but having roadblocks in the form of Presidential sentiment. If Satya has engaged Trump directly then there could be light at the end of this possibility tunnel after all.
“Following a conversation between Microsoft CEO Satya Nadella and President Donald J. Trump, Microsoft is prepared to continue discussions to explore a purchase of TikTok in the United States,” the statement reads. “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.”
Microsoft says that in any case their discussions about acquisition from ByteDance would complete no later than September 15th, 2020 and that it is keeping discussion ongoing with the President and the U.S. government.
The purchase would cover TikTok operations in the U.S., Canada, Australia and New Zealand and would result in Microsoft owning and operating it in those markets. One region not mentioned here is India, which could provide an interesting future opportunity for both companies if this deal goes down. If Microsoft can position itself as a steward of TikTok it removes the data issue (if not the over-arching national tensions between China and India).
Unsurprisingly, data and privacy protections make an appearance, with Microsoft assuring that “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.”
“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.”
The historical here (if you can call it that because this whole thing has been the work of but a couple weeks tops) is that Microsoft is pursuing TikTok because ByteDance needs to divest it in order to keep it running in the U.S., one of its biggest markets. That need arose when the White House decided that it was important to make a stink about data sovereignty with relation to the China-owned network. Even though social services of many kinds including Facebook, Twitter, Google (all of which are banned in China already) and others offer aggregate data through advertising brokerages that can make deals globally, the opportunity presented itself to run up the anti-China flag and take aim at an easy target — an app that undoubtedly has access to an enormous amount of behavioral data on U.S. citizens and therefore has genuine data privacy concerns.
And then there’s the fun Twitter theory that Trump just got pissed at a comedian who got very popular making fun of him on the platform.
Anyway, now we have another tock in the TikTok ticking clock. We’ll reach out to all parties but this looks like it may be the final result of this weekend’s flurry of news on this. We’ll see you Monday morning.