The potential blockbuster deal could go a few different ways.
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At the end of last week, it seemed that TikTok’s days in the U. S. were numbered. “As far as TikTok is concerned, we’re banning them from the United States,” President Trump said on Friday of the hugely popular social network, which his administration considers a national security risk because of its Chinese ownership.
But behind the scenes, Microsoft was exploring a takeover bid for TikTok’s American operations, which gained traction thanks to lobbying from some of the president’s top advisers and Republican lawmakers.
Satya Nadella and Mr. Trump spoke on Sunday, and it appears that the phone conversation bought the Microsoft chief time to flesh out the potential acquisition, The Times’s Mike Isaac, Ana Swanson and Maggie Haberman report. The president had dismissed rumors of Microsoft’s interest in a deal as a way to avoid shutting down TikTok, saying, “We are not an M&A country.”
Now, Microsoft has six weeks to seal a deal for TikTok, which says it has 100 million users in the U. S. In a statement, Microsoft said it would “move quickly” to pursue a deal with TikTok’s parent, Beijing-based ByteDance, aiming to wrap it up by Sept. 15. Microsoft will conduct “a complete security review” of the company, it said, and pledged to keep all American users’ data within the U. S. and sever any connections to systems abroad.
• Over the weekend, top White House advisers like Treasury Secretary Steven Mnuchin and Larry Kudlow, the chief of the National Economic Council, argued the merits of a purchase by Microsoft to Mr. Trump, and enlisted lawmakers like the Republican Senators John Cornyn, Lindsey Graham and Marco Rubio to weigh in. The risk of angering TikTok’s young user base with a shutdown in the run-up to the election was another consideration.
• On the other side, Peter Navarro, the White House’s top trade adviser, pushed for a TikTok ban as a means to punish China in the escalating tech cold war between Washington and Beijing.
How much will it cost? Last week, a group of investors, including Sequoia Capital and General Atlantic, floated a $50 billion bid for TikTok, according to Reuters. Microsoft is interested only in TikTok’s businesses in the U. S., Australia, Canada and New Zealand, and may invite other “American investors” to take minority stakes.
• The time pressure, and alternative of a shut down, may give Microsoft the upper hand in negotiations with ByteDance. But the Chinese company does not seem resigned to a forced sale: In a letter to employees today, ByteDance’s C. E. O., Zhang Yiming, said he disagreed with the order to sell its American operations and stressed that no decisions about TikTok’s fate had been made. “The attention of the outside world and rumors around TikTok might last for a while,” he wrote.
• What is certain is that TikTok’s valuation is many times higher than the $1 billion it cost in 2017 to buy its predecessor, Musical.ly. At the end of June, Microsoft had just over $136 billion in cash.
What’s in it for Microsoft? “The fickle infatuation of tweens,” The Times’s Karen Weise writes. More seriously, taking over TikTok would give the tech giant “control of one of the largest and most influential social networks in the country.” If a deal gets done, it could go a few different ways:
• A transformative Microsoft-TikTok tie up could create meaningful competition for Facebook and Google, leveraging other Microsoft brands like LinkedIn, Minecraft and Xbox.
