On August 2, Microsoft announced its interest in purchasing TikTok, a popular video social media app created by Chinese parent company ByteDance, following scrutiny from President Donald Trump over “national security, foreign policy and economy” concerns. These concerns stem from reports of the app mishandling user data to spy on the United States for the benefit of the Chinese Communist Party. TikTok has denied the accusations.
TikTok allows video content creators to publish viral dances, recipes and other content. It grew in popularity amid worldwide COVID-19 quarantines and the platform now has more than 100 million U.S. users.
Trump signed an executive order on August 6 that would ban TikTok nationwide on September 15 if a U.S.-based company does not assume ownership of the app. Microsoft, which is currently valued at more than $1 trillion, seeks to buy TikTok for as much as $30 billion, or as little as $10 billion, according to Business Insider. If the deal goes through, Microsoft agreed to transfer all of TikTok’s code from China to the United States within one year of purchasing.
According to reports from The Hill, Treasury Secretary Steven Mnuchin is heavily involved in the process and wants Microsoft to purchase the app, which resulted in pushback from White House Trade Advisor Peter Navarro. Although privacy concerns and tensions are high within the White House over the status of TikTok and whether it should be owned by a domestic company or banned outright, other U.S. companies are also expressing interest in buying the app. Microsoft, however, appears to be the frontrunner, with increased interest in buying TikTok’s global operations.
What TikTok Would Look Like Under Microsoft
While many app users are excited at the prospect of a domestic company purchasing the app to continue its operations in the U.S., others are skeptical of the deal. Microsoft Co-founder Bill Gates, for one, called the potential multi-billion dollar deal “a poison chalice.”
Microsoft is known for its business and computer software technology, but is no stranger to failed competitive projects, including devices like the Windows Phone, Nokia, Kin and Zune, all of which sought to compete with Apple products. Gates believes a Microsoft and TikTok deal might be unwise because social media companies face unique issues, such as the ethics around encryption.
Some find the business decision strange for Microsoft. There are fears surrounding TikTok’s viral popularity, in that the app may have already peaked and will start to see a decline in users and published content once it is owned by a U.S. company, or that Microsoft is inexperienced in handling technology and social media such as this. Others worry Microsoft will be seen as an enemy by the Chinese government and ByteDance, as purchasing the app would side them with the United States by association.
If Microsoft moves forward with purchasing TikTok, the company will be committed to completing an in-depth security review to relieve the privacy concerns of the U.S. government, as well as ensuring the app will benefit the United States economically, Microsoft said in a press release. The deal is expected to close in the coming weeks, as both parties are up against the executive order’s tight deadline of September 15.