The clampdown on Chinese companies by the United States is far from over. This certainly will not stop with Huawei. The American government believes that there are more Chinese companies that pose a security risk. Recent reports show that the U.S. has commenced a comprehensive containment of Chinese technology companies. The U.S. will not only ban hardware companies like Huawei, it will also prohibit Chinese software companies. As for Chinese short-video making app, TikTok, it has a way to avoid the ban. The U.S. “hammer” will not fall on TikTok if and only if it becomes an American company. A few days ago, there were rumors that Microsoft might acquire part of the social network, TikTok.
It turns out that these rumors are true. Microsoft has officially confirmed that it is in discussions with ByteDance over the purchase of TikTok. Specifically, this negotiation does not include Douyin, the Chinese version of TikTok. It covers TikTok’s operations in the U.S. but may also include Canada, Australia, and New Zealand.
TikTok’s server to move to the U.S. if the deal pulls through
TikTok is currently owned by Chinese company ByteDance. After Microsoft acquires TikTok’s business in the United States, all American user data will remain in the country. The server of the app will no longer be in China. Microsoft is also committed to the plan, if the acquisition is successful, it will return the data of US users to the United States.
The company said
“Microsoft fully appreciates the importance of addressing the President’s concerns. It 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. Microsoft will move quickly to pursue discussions with TikTok’s parent company, ByteDance, in a matter of weeks, and in any event completing these discussions no later than September 15, 2020. During this process, Microsoft looks forward to continuing dialogue with the United States Government, including with the President”.
No agreement between TikTok and Microsoft for now
Naturally, apart from a notice to the CFIUS, there is no formal transactions for now. However, the two companies are currently planning an acquisition. According to Microsoft, there is also a possibility for other companies to participate in the acquisition. This way, these companies will become a minority shareholder.
As of now, we can not be too certain that the negotiations will pull through. Obviously, the U.S. is forcing TikTok to sell to an American company. While many consider this as bullying, there are others that believe that the government is protecting its citizenry.