Microsoft in preliminary talks to acquire TikTok in the US, other regions

Redmond, Washington-based technology giant Microsoft said it is in discussions to acquire short video platform TikTok’s operations in the United States, to preserve national security.

“Microsoft fully appreciates the importance of addressing the President’s (Donald Trump) concerns. 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... To the extent that any such data is currently stored or backed-up outside the United States, Microsoft would ensure that this data is deleted from servers outside the country after it is transferred,” the statement said on Sunday.

The discussions with TikTok’s parent company, Beijing-based ByteDance, will be pursued and completed within September 15, Microsoft added.

Apart from the United States, the two companies have provided notice of their intent to explore a preliminary proposal to purchase TikTok’s service in Canada, Australia, and New Zealand, to the Committee on Foreign Investment in the United States (CFIUS).

The terms and arrangement of a deal are yet to be outlined.

“The deal could work like a licensing deal, where Microsoft is the licensed operator of the app in the jurisdictions of the deal, and ByteDance would continue to build and manage the app. Microsoft's role would be limited to handling data practices for users in the licensed jurisdictions, such as privacy, local storage of data and interfacing on law enforcement requests for data,” Aman Taneja, senior associate at Ikigai Law, a Delhi-based technology-based law practice, told TechCircle.

Microsoft would also probably be in-charge of deciding and implementing content moderation policies for users in the chosen regions, Taneja said, adding that another option would be that a separate app built by Microsoft would migrate existing TikTok users in the US.

“This seems a little unlikely for a few reasons. Users would like access to a larger network. Microsoft would also like to retain the value of the brand,” Taneja added.

Trump has reportedly given Microsoft and ByteDance a duration of 45 days to reach a deal.

News agency Reuters reported that Trump initially dismissed the idea of the deal, but changed his mind following pressure from some advisers and many in the Republican party, because banning TikTok could alienate many young voters.

The United States and India have seen a recent rise in anti-China stance. The US-China trade war, however, has been an ongoing economic conflict between the countries since the Trump administration set tariffs in 2018.

Late June, the Indian government banned 59 Chinese apps, with TikTok facing the maximum brunt, given its popularity in the country.

TikTok India was to meet with government stakeholders for an opportunity to respond and submit clarifications on the matter, but any public disclosures on the discussions are yet to be sought. The ban remains to be active.