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August 3, 2020

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TikTok sale talks in US on hold amid ban threat

Source: Agencies | 00:00 UTC+8 August 3, 2020 | Print Edition

NEGOTIATIONS for Microsoft to buy the US operations of Chinese-owned TikTok are on hold after President Donald Trump threatened to bar the social media app and came out against the sale, the Wall Street Journal reported on Saturday.

Trump said on Friday that he would take action as soon as Saturday to ban TikTok in the United States.

“Before Mr Trump’s remarks, the two sides believed the broad strokes of a deal could be in place by Monday,” the paper reported on a possible TikTok-Microsoft sale, citing unnamed sources.

It also said Trump’s threats and opposition to the deal had prompted TikTok to make further concessions, including adding up to 10,000 jobs in the US over the next three years.

US officials have said the massively popular video-sharing app could be a tool for Chinese intelligence — a claim the firm has repeatedly denied.

TikTok defended itself on Saturday, with its general manager for the US, Vanessa Pappas, telling users that the company was working to give them “the safest app,” amid US concerns over data security.

“We’re not planning on going anywhere,” Pappas said in a message released on the app.

TikTok, especially popular with young audiences who create and watch its short-form videos, has said it has tens of millions of US users and hundreds of millions globally. 

It has grown even faster as the coronavirus pandemic has pushed people physically away from each other, but into close contact online.

TikTokers employed the apps’ signature short-form videos to poke fun at Trump.

One clip that was liked over 300,000 times shows a young woman stacking bricks and smearing orange paint on her face, apparent digs at the president’s skin tone and controversial pledge to build a wall between the US and Mexico.

“Me trying to convince Trump to let us keep TikTok”, read the text on the post.

The American Civil Liberties Union cried foul over the possibility of a ban on the app.

“Banning an app that millions of Americans use to communicate with each other is a danger to free expression and is technologically impractical,” said the ACLU’s surveillance and cyber security counsel, Jennifer Granick.

Trump’s announcement drew criticism from some in the tech sector, including former Facebook chief security officer Alex Stamos, who questioned whether the move was spurred by national security concerns.

“A 100 percent sale to an American company would have been considered a radical solution two weeks ago and, eventually, mitigates any reasonable data protection concerns,” he wrote on Twitter.

Trump’s comments on Friday aboard Air Force One came after published reports that the administration is planning to order China’s ByteDance to sell TikTok.

ByteDance has agreed to divest the US operations of TikTok completely in a bid to save a deal with the White House, two people familiar with the matter said on Saturday.

ByteDance was previously seeking to keep a minority stake in the US business of TikTok, which the White House had rejected. Under the new proposed deal, ByteDance would exit completely and Microsoft would take over TikTok in the United States, the sources said.

Some ByteDance investors that are based in the United States may be given the opportunity to take minority stakes in the business, the sources added. About 70 percent of ByteDance’s outside investors come from the United States.

Range of options

Under ByteDance’s proposal, Microsoft, which also owns professional social media network LinkedIn, will be in charge of protecting all of TikTok’s US user data, the sources said. The plan allows for a US company other than Microsoft to take over TikTok in the United States, the sources added.

Microsoft did not respond to a request for comment.

ByteDance has been considering a range of options for TikTok amid US pressure to relinquish control of the app.

ByteDance had received a proposal from some of its investors, including Sequoia and General Atlantic, to transfer majority ownership of TikTok to them. The proposal valued TikTok at about US$50 billion, but some ByteDance executives believe the app is worth more than that.

ByteDance acquired Shanghai-based video app Musical.ly in a US$1 billion deal in 2017 and relaunched it as TikTok the following year.

ByteDance was valued at as much as US$140 billion earlier this year when one of its shareholders, Cheetah Mobile, sold a small stake in a private deal.

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