“Microsoft has begun talks to buy the entity (TikTok)“, reported Fox Business News on Friday. The news breaks among the developing feud between the US and China. US President Donald Trump earlier told reporters that he was considering a TikTok ban in the US. The US President holds the authority to do so under the International Emergency Economic Powers Act. With this purchase, Microsoft would own TikTok’s US operations.
TikTok is the news for its privacy concerns due to its alleged ties with the Chinese Government. Concerns over possible censorship on the platform to appease the Chinese Government have also surfaced.
While TikTok has repeatedly denied any relationship with the Government, its parent company, ByteDance is based in China, which has made it hard to believe that the company is not involved with the Government. China is notorious for having a stronghold on all the major companies under its sovereignty, including Alibaba, Tencent, and Baidu.
Everything You Need to Know about TikTok:
President Trump’s ban also follows the recent ban by India of over 100 Chinese apps, citing security and privacy concerns. The ban on Chinese apps followed an escalation in border disputes between India and China. There were an estimated 120 million active TikTok users in India at the time of the ban.
ByteDance TikTok is famous for its short videos. The platform is especially popular among teenagers.
The purchase has been under scrutiny ever since it was made by the Committee on Foreign Investment in the United States. “About 70% of the equity capital ByteDance has raised from outside investors has come from the United States”, reported Reuters.
Aside from Microsoft, investors of TikTok’s parent company ByteDance, which includes Sequoia Capital, and General Atlantic, have also shown interest in taking over the company valuing it at $50 Billion.
This value is about 50 times its projected 2020 revenue. By comparison, Snap inc., the parent company of Snapchat, Spectacles, and Bitmoji has an expected value of about $33 Billion.
The WSJ reported that “A deal could be completed by Monday, according to people familiar with the matter, and the talks involve representatives from Microsoft, Bytedance and the White House. Talks are fluid, and a deal may not come together.”
It should be noted that Donald Trump himself has dissuaded the idea of TikTok being purchased by a non-Chinese entity over a TikTok Ban. However, banning a platform, that is soaring in its popularity and has over 65 – 80 Million users in the US alone, is an unpopular decision.
Facebook and Alphabet (Parent company of Google), could have been the potential candidates for this purchase. But given the regulatory scrutiny, they’re under, it seems unlikely. Facebook CEO Mark Zuckerberg, at a congressional hearing this week, did loosely refer to TikTok as a threat from China and its plan to address it.
With this purchase, Microsoft would become a major competitor in the Social Media space. Microsoft will compete with the likes of Facebook, Twitter, and Instagram.
Microsoft already has LinkedIn as a platform for business professionals to connect in. However, Microsoft’s spotty record with social media is akin to that of Google’s. It recently shut down Mixer, a live video game streaming platform. Lunch of Mixer was to compete with Twitch and Facebook Live, and Youtube Gaming.