Microsoft is in advanced talks to buy US activities from TikTok, the popular Chinese-owned video app, which is giving rise to a call, according to a person familiar with the discussions, who spoke anonymously only on condition of anonymity National security and censorship concerns raised sensitivity to the negotiations.
The potential deal would be a win for both companies, which Microsoft Corp. a major player in the social media space and provides relief to TikTok and its parent company Bytedance Ltd., a goal of President Donald Trump.
Trump said on Friday that he would take action on Saturday to ban TikTok in the U.S. Trump's comments on Air Force One on Friday came after published reports that the government plans to order China's ByteDance to sell TikTok.
"As far as TikTok is concerned, we are banning it from the United States," Trump told Air Force One reporters on Friday when he returned from Florida.
Trump said he could use economic emergency powers or an executive order to enforce the action, and insisted, "I have that authority." He added: "It will be signed tomorrow."
Microsoft declined to comment.
According to reports from Bloomberg News and the Wall Street Journal, citing anonymous sources, the administration could soon announce a decision instructing ByteDance to sell its stake in TikTok.
It has been reported that U.S. technology giants and financial companies are interested in buying or investing in TikTok, as the Trump administration is targeting the app. The New York Times and Fox Business, citing an unidentified source, first reported on Friday that Microsoft is discussing the purchase of TikTok.
TikTok made a statement on Friday saying: "While we do not comment on rumors or speculation, we are confident that TikTok will be successful in the long term."
On Saturday, she released a short video of her U.S. general manager Vanessa Pappas saying, "We don't plan to go anywhere."
ByteDance started TikTok in 2017, then bought Musical.ly, a video service popular with teenagers in the U.S. and Europe, and combined the two. A twin service, Douyin, is available to Chinese users.
TikTok's fun, goofy videos and ease of use have made it very popular, and U.S. technology giants like Facebook and Snapchat see it as a competitive threat. It said it has tens of millions of US users and hundreds of millions worldwide.
However, Chinese ownership has raised concerns about video censorship, including criticism of the Chinese government, and the potential for user data exchange with Chinese officials.
TikTok claims that it does not censor videos that are sensitive to China-based topics and would not give the Chinese government access to US user data even if asked to do so. The company hired a U.S. CEO, a former top Disney manager, to distance itself from its Chinese property.
U.S. security officials have reviewed the takeover of Musical.ly in recent months, while U.S. forces have banned their employees from installing TikTok on government-issued phones. Secretary of State Mike Pompeo said this month that the United States is considering banning TikTok.
These national security concerns go hand in hand with a broader US response against Chinese companies, including telecommunications providers Huawei and ZTE. The Trump administration has ordered the U.S. to stop funding devices from these providers on U.S. networks. She has also tried to steer Huawei allies away because of concerns about the Chinese government's access to data that the company has denied.
The Trump administration has previously intervened to block or liquidate business related to national security concerns, including the shutdown of Broadcom of Singapore from its $ 117 billion offer to U.S. chip maker Qualcomm in 2018 to help Get US leadership in telecommunications. China's Beijing Kunlun Tech Co. has also been asked to sell the gay dating app Grindr in 2016.
Other countries are also taking action against TikTok. India has banned dozens of Chinese apps this month, including TikTok, citing privacy concerns over tensions between countries.
According to Susan Ariel Aaronson, a professor at George Washington University and an expert on data governance and national security, the US government's poor track record of strengthening American data protection reduces its credibility in acquiring Chinese-owned companies. Despite the efforts made last year, the federal government has not passed comprehensive laws to protect privacy or data security, and the Department of Justice has tried to undermine encryption for law enforcement purposes, which ensures that only senders and recipients can see the content they have exchanged. Tech companies have resisted this.
"I am still cautious of forcing TikTok to sell without privacy laws to follow," tweeted Alex Stamos, a former Facebook chief security officer who is now studying Internet security at Stanford University. He added that Microsoft "has one of the best child safety teams, which is currently a greater risk for TikTok."
Microsoft, which owns LinkedIn, is the No. 4 digital advertising company in the United States after Google, Facebook and Amazon. However, the purchase of TikTok would be a significant change in direction from Microsoft CEO Satya Nadella's focus on workplace software that increases people's productivity, said Patrick Moorhead, technology analyst at Moor Insights & Strategy.
Unlike Google or Facebook, which dominate the digital advertising industry, Microsoft has not been extensively researched by US politicians and anti-trust authorities regarding its market power. Moorhead said this could make it easier to acquire TikTok, which poses a competitive threat to social networks like Facebook, Instagram, Google's YouTube, and Snapchat. It's an interesting irony that Microsoft was at the center of the pioneering antitrust process 20 years ago.
If the deal comes, "it would definitely make Microsoft a much more competitive advertising system in the years to come," said Ross Benes, an analyst at eMarketer.
Kevin Freking on board Air Force One and Zeke Miller in Washington contributed to this report