President Trump will not try to immediately shut down TikTok as he had previously threatened but said the Chinese-owned app will be “out of business” by Sept. 15 in the U.S. if parent company ByteDance has not sold TikTok to Microsoft or another American company.
“I set a date of around September 15, at which point it’s going to be out of business in the United States,” Trump told reporters, speaking Monday at the White House. He also said that under any potential deal for TikTok — with Microsoft or any other U.S. entity — the U.S. Treasury “should be reimbursed” or “paid a substantial amount of money,” but Trump did not detail what that would mean. He claimed the U.S. government should get a cut of a transaction price “because we’re making it possible for this deal to happen.”
Several of Trump’s aides had warned the president that trying to ban TikTok could lead to “an intense legal battle, as well as hurt the president’s popularity with younger Americans,” the New York Times reported. It’s unclear that an attempt by Trump to “ban” TikTok would stand up in court and the president’s threats about shutting down the popular video-sharing app may simply be intended as putting pressure on ByteDance to sell the app to an American firm.
On Sunday, Microsoft confirmed that it was in talks to buy TikTok from ByteDance and expects to conclude the M&A negotiations by Sept. 15. Microsoft said that, if it consummated a deal for TikTok, it would move all data servers covering U.S.-based users to American shores, aiming to alleviate concerns by Trump and other U.S. policymakers that Chinese government officials might be able to track TikTok users or access private messages.
“Following a conversation between Microsoft CEO Satya Nadella and President Donald J. Trump, Microsoft is prepared to continue discussions to explore a purchase of TikTok in the United States,” Microsoft said in a statement Sunday.
“Microsoft fully appreciates the importance of addressing the President’s concerns,” the tech company continued. “It is committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.”
Strategically, TikTok would be a better fit for Google/YouTube or Facebook than Microsoft, LightShed Partners analysts led by Rich Greenfield wrote in a blog post Monday. But those companies “cannot even contemplate a TikTok acquisition given the ongoing antitrust/regulatory scrutiny,” the analysts wrote. “With time likely of the essence for ByteDance/TikTok to appease government regulators, we doubt there is the ability to entertain other bidders – we suspect it is Microsoft or nobody at this point.”
According to Microsoft, the talks with ByteDance are preliminary and there’s no guarantee it will reach an agreement for TikTok.
In response to the Microsoft/TikTok talks and Trump’s suspending plans to ban the app, a representative for TikTok said in a statement, “TikTok is loved by 100 million Americans because it is a home for entertainment, self-expression, and connection. We’re motivated by their passion and creativity, and committed to continuing to bring joy to families and meaningful careers to those who create on our platform as we build TikTok for the long term. TikTok will be here for many years to come.”
Microsoft has been exploring buying TikTok’s U.S., Canada, Australia and New Zealand operations. Trump, in his remarks Monday, suggested that it would be easier for Microsoft to buy all of TikTok than the roughly 30% represented by those markets.
“The [TikTok] name is hot, the brand is hot,” Trump said. “And who’s going to get the name? How do you do that if it’s owned by two different companies? So, my personal opinion was, you are probably better off buying the whole thing rather than buying 30% of it.”
The naming question is just one issue involved in Microsoft carving out a portion of TikTok from ByteDance. That would require separating the TikTok back-end infrastructure — including the artificial-intelligence algorithms that power TikTok’s feed — from ByteDance’s equivalent Chinese equivalent app, Douyin. The TikTok and Douyin recommendations engines include some of the same code behind TikTok’s “notoriously addictive video feed,” the Wall Street Journal reported.
Meanwhile, Microsoft’s forays into consumer-facing markets “have been mixed at best,” the LightShed analysts wrote, citing the company’s acquisitions of Skype, Mixer (the game-streaming service shut down this summer), LinkedIn and even Minecraft, “which has not scaled the way it might have under different ownership.”