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Why is Microsoft interested in buying TikTok?

US President Donald Trump has said that he plans to ban the Chinese-owned video app's US operations, but now he is looking for a 'substantial' piece of the pie.

Why is Microsoft interested in buying TikTok?

Microsoft said on Sunday that CEO Satya Nadella had spoken to President Donald Trump and "is prepared to continue discussions to explore a purchase of TikTok in the United States" and that the company is "committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury." This comes after Trump stated he was going to ban the service in the US.

TikTok targeted by Microsoft

Many prominent Republicans, including House Republican Leader Kevin McCarthy, issued statements in support of a Microsoft acquisition of TikTok's US operations. Some congressional aides are worried about a backlash by younger voters against the party if Trump banned TikTok, which has 100 million American users.

Microsoft and TikTok parent ByteDance gave the US government a notice of intent to explore a preliminary proposal for Microsoft to purchase the TikTok service in the United States, Canada, Australia, and New Zealand.

US Senate Democratic leader Chuck Schumer also backed the sale, while a senior White House adviser raised concerns about a sale to Microsoft.

"A US company should buy TikTok so everyone can keep using it and your data is safe," Schumer said on Twitter, adding: "This is about privacy. With TikTok in China, it's subject to Chinese Communist Party laws that may require handing over data to their government."

TikTok, TikTok... China and US tensions continue.
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TikTok, TikTok... China and US tensions continue.Florence LoREUTERS

White House trade adviser Peter Navarro suggested on Monday that Microsoft could divest its holdings in China if it were to buy TikTok.

"So the question is, is Microsoft going to be compromised?" Navarro said in an interview with CNN. "Maybe Microsoft could divest its Chinese holdings?"

Navarro said the Chinese government and military use Microsoft software “to do all the things they do.”

President Trump wants a 'substantial' piece of the TikTok pie

The US President spoke about the move on Monday stating that the US government should get a "substantial portion" of the sales price of the US operations of TikTok and warned he will ban the service in the United States on 15 September without a sale.

The turnaround came after Trump Friday he said he was planning to ban the Chinese-owned video app's US operations as soon as Saturday after dismissing a possible sale to Microsoft.

"I did say that if you buy it, whatever the price is that goes to whoever owns it, because I guess it’s China essentially … I said a very substantial portion of that price is going to have to come into the Treasury of the United States because we’re making it possible for this deal to happen," Trump said.

It was not clear how the US government would receive part of the purchase price.

He added it "will close down on September 15 unless Microsoft or somebody else is able to buy it and work out a deal, an appropriate deal so the Treasury … of the United States gets a lot of money.

You | US President Donald J. Trump holds a news conference in the James Brady Press Briefing Room of the White House, 3 August 2020.
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You | US President Donald J. Trump holds a news conference in the James Brady Press Briefing Room of the White House, 3 August 2020.MICHAEL REYNOLDS / POOLEFE

US officials have said TikTok poses a national risk because of the personal data it handles. TikTok CEO Kevin Mayer said in a blog post last week that the company was committed to following U.S. laws and was allowing experts to observe its moderation policies and examine the code that drives its algorithms.

Trump's comments confirmed a Reuters report Sunday that he had agreed to give China's ByteDance 45 days to negotiate a sale of popular short-video app TikTok to Microsoft.

Trump said he did not mind "whether it’s Microsoft or somebody else – a big company, a secure company, very, very American company buy it."

ByteDance says goal of US was to ban TikTok - internal letter

ByteDance founder Zhang Yiming told employees in an internal letter on Tuesday that the United States goal was not to force a sale of TikTok US operations but rather to ban the app, and that some people had misconceptions about the situation.

The letter, which was reported by Chinese media and confirmed by a source to Reuters, was sent only to ByteDance's Chinese employees after news that ByteDance was in talks to sell parts of TikTok to Microsoft Corp prompted online criticism of the firm and Zhang.

ByteDance did not immediately respond to a request for comment.


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