The short video platform TikTok or at least its majority Chinese owner Bytedance, has long been a thorn in the side of the American government. On Friday evening, President Trump announced a decision for Saturday, which was still a long time off on Sunday. He would “ban” TikTok from the United States, it was said, among other things.
But what does that mean exactly, and how can the American authorities ban the operation of an app that has 100 million users in the U.S. alone and is an integral part of everyday American life?
In 2017, the Chinese internet technology company Bytedance acquired the Musical.ly video platform, which was then headquartered in Los Angeles and Shanghai, and integrated it into the TikTok platform in 2018. The startup Musical.ly was initially financed by, among others, Silicon Valley investors. Since then, the American authorities have feared that personal data on American TikTok users may be extracted from the Chinese state and used for hostile security purposes. There is, of course, no publicly available evidence for this.
TikTok defends itself
TikTok’s parent company, Bytedance will still stick to its strategy and invest globally to create global added value. The group once again assured that it would adhere to the legal requirements in the individual countries. Also, the legal systems there will be used to protect the legitimate interests of the company.
The interdepartmental overseas investment oversight committee (CFIUS), headed by the United States Treasury, retrospectively initiated a bytedance takeover of 2017’s recent acquisition of Musical.ly (today’s Tiktok) at the request of prominent senators last fall completed. As a rule, such investigations result in a suspicious transaction being reversed more or less voluntarily by the investors concerned.
In the case of TikTok, this would mean that the Chinese owners of Bytedance would at least give up TikTok’s American business and sell it back to an American company or investors.
According to American media reports, American investors are negotiating with Bytedance about a possible takeover of TikTok. The White House and the U.S. Treasury are likely to act as matchmakers and want to bless any transaction. For a while, it looked as if the American software giant Microsoft would take over TikTok. So far, however, it is not clear whether this was just about TikTok’s business in the United States or the global TikTok operation.
The minimal goal of the White House is that TikTok again gets into American hands. Microsoft would have to fit in as a new owner. The Wall Street Journal reported that Bytedance’s founder, Zhang Yiming, is now ready to waive a minority stake in TikTok. That would mean that Microsoft would control 100% of TikTok. TikTok is also said to have offered to create 10,000 new jobs in the United States over the next three years if the app were taken over by Microsoft. TikTok currently has approximately 1,500 employees in America.
Microsoft ready to take over
Microsoft confirmed late on Sunday that a conversation had taken place between Microsoft CEO Satya Nadella and President Trump. Because of the conversation, Microsoft will continue the discussions and consider buying TikTok in the United States. Microsoft will quickly follow up on the talks with TikTok’s parent company Bytedance and, in any case, will close them by September 15, 2020.
The U.S. software giant plans to acquire TikTok services from Bytedance in the United States, Canada, Australia, and New Zealand, according to the announcement, and to operate the platform in these markets in the future. He can also envisage the participation of other American minority investors in the transaction.