Aug 05, 2020
1  Likes 0 Comments
About this Deal
TikTok, an app known for quirky, short videos, is facing political heat because of its ties to China.
US President Donald Trump has ramped up his campaign against the short-form video app. After calling for TikTok to be banned, the president appears to have given the app's US operations a reprieve until next month. Microsoft is discussing terms of a possible deal with ByteDance, the app's Chinese parent company, to purchase that portion of the business.
The deal could be worth between $30 billion and $10 billion, CNBC reported Wednesday, but didn't detail what might constitute the difference in valuations. The president has suggested the US should receive a portion of the transaction price, though it's unclear whether the government has the authority to request such a payment. Negotiations could be wrapped up within three weeks, the business network reported, sooner than the Sept. 15 deadline that the company had initially suggested.
Microsoft declined to comment. ByteDance didn't immediately respond to a request for comment.
The reported activity follows a flurry of news late last week and over the weekend that raised the specter of an immediate ban of the popular app. The situation, which seemed to change almost as quickly as videos scroll on the app, started on Friday, when Trump was reported to be considering forcing a divestiture of TikTok's US operations, and news that Microsoft could be an interested buyer.
Hours after those reports, Trump told reporters aboard Air Force One that he'd prefer to ban the app, an idea his administration floated earlier this month. That prompted an outpouring of concern from TikTok users worried the app would go away.
By Saturday morning, the situation had changed again, with Reuters reporting that ByteDance had agreed to give up control of US operations. TikTok US General Manager Vanessa Pappas said in a video statement that TikTok in the US isn't "planning on going anywhere" and "is here for the long run." Microsoft confirmed its interest on Sunday. The following day, Trump suggested publicly that the US Treasury Department get a commission on any deal.
Owned by ByteDance, a Beijing-based tech company, TikTok has drawn the attention of the Trump administration, as well as other parts of the government, because of concerns it scoops up information on Americans that could be turned over to the Chinese government. The US Army and Navy have banned service members from downloading the app to government-issued phones. Earlier this month, the US House of Representatives voted to bar the use of TikTok on all government-issued phones. The Senate is expected to pass the measure. Two senators have also requested the Department of Justice open an investigation of TikTok, as well as Zoom.
The US isn't alone in its concerns. India has already banned TikTok, and Australia is also considering blocking the app.
The rising concerns come as TikTok sees its popularity explode. The app has gotten a new boost from the coronavirus pandemic, drawing in people looking to escape the boredom of lockdown. It's been downloaded more than 2 billion times, according to research firm Sensor Tower, with 623 million coming during the first half of this year. India had been its largest market, followed by Brazil and the US. (TikTok isn't available in China, where ByteDance distributes a domestic version called Douyin.)
In a move that could smooth things over with some lawmakers, TikTok on July 22 said it plans to hire 10,000 people in the US over the next three years. The company said it would add roles in engineering, sales, content moderation and customer service in California, New York, Texas, Florida and Tennessee.
TikTok also suspended talks to house its international headquarters in the UK, amid worries about a trade war between Britain and China, according to The Guardian.
Here's what you need to know about the political backlash against TikTok:
Why is the Trump administration worried about TikTok?
Politicians are concerned that the Chinese government could use the video app to spy on US citizens. In an interview with Fox News that aired July 6, Secretary of State Mike Pompeo said users who download the app are putting "private information in the hands of the Chinese Communist Party." Trump cited a different reason: punishing China for its response to the coronavirus. Asked about Pompeo's remarks, Trump confirmed the US is considering a TikTok ban. "It's a big business," Trump said during an interview with Gray Television. "Look, what happened with China with this virus, what they've done to this country and to the entire world, is disgraceful." He followed up on July 31 with his comments aboard Air Force One.
Trump's and Pompeo's remarks came after TikTok users and K-pop fans said they helped spoil attendance at a June presidential rally in Tulsa, Oklahoma, by reserving thousands of tickets online with no intention of attending. Trump supporters have a visible presence on TikTok, so banning the app could also work against the president during an election year.
On July 12, White House trade adviser Peter Navarro told Fox Business that TikTok and messaging app WeChat "are the biggest forms of censorship on the Chinese mainland" and to expect "strong action on that." He didn't specify if a ban was coming.
TikTok's access to US users' data may well be worth investigating. There'll always be concerns when apps from foreign companies collect large amounts of user data, said tech policy expert Betsy Cooper, director of the Aspen Policy Hub.
But, she added, "it's unclear how much effort the administration will put into actually investigating the seriousness of the specific security concerns with the app versus using this as a threat for broader geopolitical leverage."