Microsoft’s TikTok deal exploded after Trump intervened

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Microsoft acquisition talks with TikTok and its Chinese parent company ByteDance “swelled” this summer after President Donald Trump intervened, according to a New York Times report, citing people familiar with the situation.ByteDance is being forced to sell off the U.S. business of TikTok by the Trump administration, which says the app’s current ties to China make it a threat to national security. An executive order signed by Trump on August 6 means a sale must be closed by September 15. However, TikTok sued the U.S. government on Monday, alleging it was deprived of due process. The lawsuit could delay the ban, giving TikTok more time to get a better deal to sell.

When talks began, Microsoft was reportedly hesitant to make any sort of big acquisition of TikTok, in part because of growing tensions between the United States and China, according to the New York Times report. However, a minority stake in the hugely popular video sharing app was viewed positively, as it could lead TikTok to ditch Google Cloud, which it currently uses, and sign up for Microsoft Azure, making it instantly l one of Microsoft’s largest cloud customers. TikTok could also be part of Microsoft’s $ 7 billion advertising business.

Microsoft released a statement on August 2 regarding its attempt to buy the US business of TikTok. However, on August 3, Trump said he would rather have Microsoft, worth $ 1.6 trillion, buy the app that is used by 100 million Americans in its entirety. “I think buying 30% is complicated,” Trump told reporters in the Cabinet Room at the White House.

There are now several other bidders competing with Microsoft, the main one being the enterprise software company Oracle. Netflix and Twitter have also been contacted by bankers and investors, but it is not known if they are interested, according to the Times. Either way, the talks between the parties “turned into one big messy political soap opera,” according to the report.

As for TikTok’s price, no one thinks so, but estimates range from $ 20 billion to $ 50 billion, depending on what part of the business is sold. CNBC’s David Faber reported earlier this month that Microsoft was discussing a $ 10 billion to $ 30 billion range to buy TikTok. A deal with Microsoft could increase the valuation of TikTok’s business outside of China up to $ 80 billion, according to sources cited by The Times. It should be noted that any deal reached could easily be derailed by Washington or Beijing.

Microsoft and TikTok declined to comment when contacted by CNBC.

Read the full story in The New York Times here.

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