TikTok just found an ideal buyer to save the company from being banned by the Trump administration, which could result in saving millions of its American users. And for Microsoft, this looks like a really expensive purchase, expected to be valued around $40 billion.
Satya Nadella, Microsoft’s CEO since 2014, apparently had a talk with the White House – with the hopes of reshaping Microsoft’s future as consumer-facing biz – regarding a deal, Microsoft plans to push through: the acquisition of the Beijing-based app, TikTok.
Although the app has been challenged numerous times due to privacy concerns, TikTok is still used by 8.2 million women in the US and 6.1 million men, most of them under the age of 21, making the app one of the fastest-growing video-sharing app of the decade. When TikTok was banned in India, it lost 119 million active users from its 800 million worldwide users. This makes ByteDance, the current owner of TikTok, anxious about the future of the company.
Trump Gives Microsoft the Go Signal
“Here’s the deal, I don’t mind if – whether it’s Microsoft or somebody else – a big company, a secure company, a very American company buys it,” said Trump, giving the approval to Microsoft on the acquisition. The president is giving Microsoft exactly a month and 12 days – from when the verbal approval was announced – to get the deal done, or else it will be banned.
Trump has made countless threats on the video-sharing app: investigating its ties with the Chinese government since last year, worsening it by the beginning of July, even saying he would use “executive action” on August 1.
Microsoft said in a statement that their goal is to address the president’s concerns by “acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.” Microsoft’s plan is to address the privacy concerns by deleting data from servers outside the country after transferring all of TikTok’s data to US-based servers. The discussion between ByteDance and Microsoft is expected to wrap up by September 15.
The Future of TikTok Under Microsoft
Steve Ballmer, a former CEO of Microsoft, has said that the plan to purchase TikTok is “an exciting proposition” for the billion-dollar company. “I think it’s an exciting avenue for Microsoft to really increase its consumer base,” added Ballmer.
With Microsoft’s failures and successes in purchasing businesses, critics are on the lookout of how the company plans to run TikTok once the acquisition is finalized. There’s also a worry that Microsoft could get too friendly with China for which Ballmer just said, “I think it’s really hard to say that. If Microsoft was tight and cozy with the Chinese government, Microsoft’s business would be bigger in China. […] If the Chinese market was as piracy-free as the rest of the world, if the Chinese market was as accepting of Microsoft’s enterprise services as the rest of the world, Microsoft would be really, I think, quite a bit bigger.”