TikTok is shopping and Microsoft is interested

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As the White House prepares to ban American consumers from using TikTok for safety reasons, the Chinese parent company of the popular music app is on the hunt for a savior in the form of the tech giant Microsoft.

FOX Business was the first to announce on Friday that Microsoft had entered negotiations to buy the entity. According to people with first-hand knowledge of the matter, the discussions initially focused on the small US business of TikTok, but they say Microsoft may want the scale of the entire company which has hundreds of millions of users in the world. world.

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Either way, the talks are a realization on the part of Bytedance, the Beijing-based parent company of TikTok, that it must offload its U.S. subsidiary before the Trump administration shuts it down. Investment bankers tell FOX Business that if the Microsoft deal fails, Bytedance will certainly buy TikTok more broadly, including from private equity firms. One person with first-hand knowledge tells FOX Business that two to three serious buyers have expressed interest.

Any deal will be closely scrutinized by the Trump administration. “If Microsoft or an American company buys TikTok, it will be carefully monitored to ensure that there is absolutely no Chinese involvement in the new company,” said an informed Wall Street executive.

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As FOX Business reported earlier on Friday, President Trump is ready to sign an order to force Bytedance to cede its US TikTok operations on security grounds. The divestiture notice followed a review by the Committee on Foreign Investments in the United States (CFIUS), an arm of the Treasury Department. CFIUS has investigated whether TikTok shares its user data with the Chinese government for surveillance purposes – which TikTok has strongly denied.

Discussions between Microsoft began about a month ago as the Trump administration appeared to be moving forward with an assignment notice, these people say. It was at this point that Bytedance contacted senior executives at Microsoft regarding the sale of at least its business in the United States.

The decision to approach Microsoft stems from the realization that not only were TikTok’s US operations on the verge of being turned upside down by US regulators, but also that Microsoft was perhaps the only US tech company not to be in Congress’s sights to have enough cash to buy, the people added.

According to financial records, the Seattle-based tech titan has $ 136 billion in cash and liquid investments that can be converted into cash.

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Microsoft was noticeably absent from the House Judiciary subcommittee this week on antitrust over alleged big-tech abuses. Thursday’s session on Capitol Hill showed that there is a rare bipartisan deal that the companies that testified – Facebook, Amazon, Apple and Google – could achieve monopoly status and should not be allowed to expand by acquisitions.

A spokesperson for TikTok declined to comment on “rumors or speculation” but did not deny that the talks were taking place. Microsoft declined to comment and a Treasury spokesperson made no comment.

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Bankers are unsure of TikTok’s worth on its own, and it’s even more difficult to estimate the value of its business in the US alone, though some believe it could be valued at tens of billions. of dollars given its growing popularity, especially among young people and influencers.

TikTok has 800 million users worldwide and 80 million in the United States. These users – who post and share short music videos – provide a treasure trove of personal information that the U.S. government believes the Chinese government has forced TikTok to hand over for surveillance.

But those same users and the data they provide could also be exploited by an American company, like Microsoft, for its legitimate business activities.

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Microsoft still has questions about any purchase. The tech company is one of the biggest players in computer software and cloud computing. But he has a limited and mixed record in social media. In 2012, he launched So.cl (pronounced social) to compete with Facebook, but shut it down in 2017. He currently owns and operates LinkedIn, a social network focused on businesses with an older demographic which he bought. in 2016.

Microsoft is also unsure whether just owning the U.S. company TikTok is worth it, bankers say. The TikTok brand would remain and operate around the world. Recently, Facebook said it is looking to be globally competitive in the short video business. Bankers believe Microsoft may be looking to buy the whole company, but it’s not clear Bytedance wants to sell all of TikTok.

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