Chinese company Bytedance and Microsoft have resumed negotiations of a buyout deal for all TikTok US operations after US President Donald Trump said on Friday he would ban the popular video-sharing app and opposed the potential deal.
Why it matters: Trump’s statement follows weeks of high-profile pressure on Tiktok and parent company Bytedance after India banned the app a month ago and Japanese lawmakers spoke on Tuesday of impending restrictions.
- Under current US law, it’s unclear how a ban of the free app would work on a legal and technical level.
- Bytedance’s offer to sell is an attempt at a deal so Tiktok can stay online in the US.
Details: Microsoft said on Sunday that it would resume negotiations with Bytedance that were first reported on Friday then suspended following Trump’s statement, adding that it would complete discussions by September 15.
- Trump hinted at deploying an executive order to ban the app. Some speculated that he could punish Apple and Google for carrying Tiktok in their app stores, or add Tiktok to a list of foreign entities that present a risk to US national security, like Huawei.
- Microsoft said that it would resume discussions with Bytedance about the acquisition following CEO Satya Nadella’s conversations with Trump.
- Valued at upwards of $100 billion, Bytedance was considering a New York listing, among others, but walked back plans to list in the US on Friday, according to a Reuters report. They are likely to list closer to home in Hong Kong or Shanghai, it said.
- Loyal Tiktok users rushed online to criticize Trump’s decision. The American Civil Liberties Union called the potential ban “a danger to free expression and technologically impractical” in a viral tweet.
- Tiktok’s US operation has repeated sought to assure users and the government that their operations fall well within US laws, including announcing the launch of a Transparency and Accountability Center on July 29, 2020, where experts can examine Tiktok’s moderation policies and algorithm in real time.
Context: Tiktok is incredibly popular in the US: the app has an estimated 70 million monthly active users in the US and could earn nearly $500 million in the US market alone in 2020.
- US authorities are concerned about Chinese government access to US user data. The Committee on Foreign Investment in the United States launched an investigation into Bytedance’s 2017 acquisition of Musical.ly, Reuters reported in November.
- Trouble for Tiktok in the US has been brewing for months: In June, the app was accused of censoring the Black Lives Matter hashtag; in July, US federal agencies began investigating Tiktok’s compliance with an agreement it struck with regulators in February 2019 involving data collection from users under the age 13.
- Bytedance’s global standing is growing precarious. India’s Tiktok ban is expected to cost the company $6 billion.
- The Trump administration began voicing the possibility of banning Tiktok earlier this summer over concerns that the Chinese Communist Party could access US user data.
- Tiktok denied Trump’s claims in a 2019 statement, saying that “none of our data is subject to Chinese law” and “We have never been asked by the Chinese government to remove any content and we would not do so if asked. Period.”