Microsoft has confirmed it is in talks with TikTok over the sale of the video platform’s presence in four of the Five Eyes nations – but not the UK.
Discussion are taking place between Microsoft and ByteDance, the video platform’s Chinese parent company, after MSFT CEO Satya Nadella spoke with President Donald Trump to address the US Government’s misgivings about the acquisition.
The deal would see Microsoft own and operate TikTok in four territories: the United States, Canada, Australia, and New Zealand. The take-over would offer users “world-class security, privacy, and digital safety protections”, a Microsoft statement said.
TikTok has over 800 million active users globally, with over two billion Play Store downloads. It has offices in Los Angeles, New York, London, Paris, Berlin, Dubai, Mumbai, Singapore, Jakarta, Seoul, and Tokyo.
ByteDance is reportedly pressing ahead with plans to relocate its operation from Beijing to London, having been given the green light to make the move by the UK Government.
This could explain why it is not considering relinquishing control of TikTok in the UK, the only nation that is part of the Five Eyes alliance not to feature in the proposals.
Former Facebook CISO Alex Stamos believes ByteDance could look to sell TikTok Europe in a separate deal.
Countries in scope is the Five Eyes minus the UK. I wonder if Bytedance is shopping TikTok Ireland for EU data to separate bidders.
— Alex Stamos (@alexstamos) August 2, 2020
Microsoft said it aims to move quickly in the talks, and the two parties have set a deadline of September 15 to conclude discussions.
Martin Garner, COO of market analysts CCS Insight, said: “Microsoft’s proposed acquisition of TikTok’s operations in some countries may provide a neat solution to the trade war issues that TikTok is facing, as well as a sizeable advertising platform to rival YouTube, and it would bring a large new cloud user for Microsoft.
“But it’s hard to see other synergies of any size, so it’s likely that TikTok would continue to operate at arm’s length, similar to LinkedIn.”
Private data on TikTok’s American users would be transferred to the US as part of ny deal, and deleted from any storage overseas.
Security around TikTok data has been a major concern for US security officials, and led to President Trump suggesting last week that he would ban the platform from the US, where it has 80 million active monthly users.
Secretary of State Mike Pompeo said today that TikTok presents a national security risk to the US, and is one of several apps “feeding data directly to the Chinese Communist Party.”
The Microsoft statement added: “Microsoft appreciates the U.S. Government’s and President Trump’s personal involvement as it continues to develop strong security protections for the country.”