Microsoft is in talks to acquire TikTok, the Chinese-owned video app, according to a person with knowledge of the discussions, as U.S. President Donald Trump said Friday that he was considering taking steps that would effectively ban the app from the United States.
It’s unclear how advanced the talks between Microsoft and TikTok are, but any deal could help alter TikTok’s ownership, said the person with knowledge of the talks, who spoke on the condition of anonymity. TikTok is owned by ByteDance, a Chinese internet company that is valued at US$100-billion. That has raised scrutiny of the app, with Trump administration officials saying that they have been concerned that TikTok poses a threat to national security.
The Trump administration has been weighing whether to order ByteDance to divest from U.S. assets it acquired in 2017, which were later merged into TikTok. Bloomberg reported Friday that the President was poised to announce an order that would force ByteDance to sell TikTok’s U.S. operations.
The Trump administration has also been weighing other potential actions against the company, including adding ByteDance to a so-called “entity list,” which prevents foreign companies from purchasing U.S. products and services without a special licence, according to people familiar with the matter.
“We’re looking at TikTok. We may be banning TikTok,” Mr. Trump told reporters Friday before heading to Florida. “We may be doing some other things. There’s a couple of options. But a lot of things are happening, so we’ll see what happens. But we are looking at a lot of alternatives with respect to TikTok.”
Representatives from TikTok did not respond to requests for comment. A spokesperson for Microsoft declined to comment. The discussions between Microsoft and TikTok were earlier reported by Fox Business.
Lawmakers and the Trump administration have increasingly questioned whether TikTok is susceptible to influence from the Chinese government, including potential requests to censor material shared on the platform or to share American user data with Chinese officials.
The app has been under review since late last year by the Committee on Foreign Investment in the United States, a federal panel that examines foreign acquisitions of U.S. firms for national security threats.
In response to the heightened scrutiny, TikTok has aimed to ease government concerns by tapping an American to head its U.S. business. In May, TikTok hired a top Disney executive, Kevin Mayer, to be its chief executive.
Executives at TikTok have discussed other scenarios to alleviate regulator concerns, including one in which U.S. investors like Sequoia Capital and General Atlantic could purchase TikTok back from ByteDance, people familiar with the discussions have said, with the Chinese company retaining a minority stake in the social app.
Founded in 2014, TikTok has grown from an esoteric music video app into a global social media phenomenon. The app, which is used by more than 800 million people across the world, was acquired in 2017 by ByteDance. The app grew popular with young people by adding music tracks to user-generated video content. The videos often travel virally across Facebook and Twitter.
Since the ByteDance acquisition, the company’s Chinese offices have swollen to tens of thousands of employees. But the company has maintained a U.S. presence, with offices in New York and Los Angeles, and has continued to hire Americans aggressively.
TikTok has spent the past few months bulking up its lobbying operation in Washington in an attempt to convince lawmakers that it is a U.S. company and to prevent the United States from forcing it to break away from its Chinese parent company.
With help from prominent investors like SoftBank and General Atlantic, it has overhauled its presence in Washington, including hiring the former head of the Internet Association, a trade group that represents companies like Google and Facebook, and staff members from prominent members from Congress.
The company has signed on more than 35 lobbyists, including David Urban, a former West Point classmate of Secretary of State Mike Pompeo and an ally of Mr. Trump. The company’s lobbyists have highlighted TikTok’s American investors and Mr. Mayer’s hire.
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