Business News Deals Digital Top Stories

Microsoft out of the running to buy TikTok US

By | Published on Monday 14 September 2020


Microsoft has announced that it is no longer in the running to acquire the TikTok business in the US. It’s thought that the video-sharing app’s Chinese owner Bytedance will instead do a deal with a consortium led by another American technology firm, Oracle, which may or may not placate TikTok’s critics in Washington, most importantly of all President Donald Trump.

According to sources, the Oracle-led consortium will not acquire TikTok US outright, but instead become a technology partner of Bytedance, controlling all the user-data of the app’s American users.

It’s not clear whether that will be sufficient to allay the concerns expressed by American politicians regarding the access the Chinese government may or may not have to TikTok’s global userbase and data. Nor, more importantly, whether it will persuade Trump to cancel the executive order that bans Americans from transacting with Bytedance, in theory from this weekend.

Microsoft had been linked to a purchase of the TikTok business in the US and elsewhere even before Trump’s executive order was issued, as the political controversy over the app and its Chinese owner started to gain momentum in various countries.

Once the executive order was out there and a deadline had been set for something significant to happen regarding TikTok in the US, the recently appointed global boss of the app, former Disney exec Kevin Mayer, announced he was quitting.

The assumption was that moves to placate the American government would result in the TikTok global business being sliced up, so that its America-based chief would no longer be in charge of the app’s America-based operations, hence his decision to stand down.

Quite what TikTok US will look like if and when the Oracle deal goes through remains unclear. It was already rumoured that any deal in the US would not include a sale of the algorithm that drives the TikTok experience, a recent change to export rules in China having added extra complications if that key technology was to be sold to a foreign entity.

The Oracle arrangement will likely be more palatable to the Chinese government. However, the big question remains as to whether what is currently being proposed ticks the required boxes in Washington, assuming Bytedance would rather not have to rely too much on its legal action against Trump’s executive order.

On one level, the proposed Oracle partnership doesn’t seem as radical as what Team Trump implied they would like to see happen. But on another level, Oracle chief Larry Ellison is one of the technology sector’s few high profile Trump supporters, which could well be enough to get the required approval from the President.

Confirming it was now out of the running to acquire TikTok US, Microsoft said a statement yesterday: “ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft. We are confident our proposal would have been good for TikTok’s users, while protecting national security interests”.

“To do this”, it went on, “we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation, and we made these principles clear in our August statement. We look forward to seeing how the service evolves in these important areas”.

According to Reuters, supermarket giant Walmart, which had ultimately become part of the Microsoft bid for TikTok, is still manoeuvring to get a stake in the app’s American business through a separate deal.

The latest dramas in the US come as TikTok announces it now has more than 100 million active monthly users in Europe alone.

That stats brag was accompanied by a statement on how significant the app’s on-the-ground presence in Europe itself now is in terms of its workforce and – perhaps most importantly in the context of all the political hoo haa – that it now has a Europe-specific Trust And Safety Hub and data privacy team based in Ireland.