Microsoft eyes TikTok, initiates a new acquisition moves on the popular video sharing app

Microsoft is in a new acquisition talk with the latest video sharing app, Tiktok.

According to a people familiar with the matter. A deal would give the software company a popular social-media service and relieve U.S. government pressure on the Chinese owner of the video-sharing app.

Spokespeople for Microsoft and TikTok declined to comment on any potential talks. The software company’s interest in the app was reported earlier by Fox Business Network.

“We are looking at TikTok. We may be banning TikTok,” Trump told reporters Friday at the White House. “We are looking at a lot of alternatives with respect to TikTok.”

According to Bloomberg, any transaction could face regulatory hurdles. ByteDance bought Musical.ly Inc. in 2017 and merged it with TikTok, creating a social-media hit in the U.S — the first Chinese app to make such inroads. As TikTok became more popular, U.S. officials grew concerned about the potential for the Chinese government to use the app to gain data on U.S. citizens.

The Committee on Foreign Investment in the U.S. began a review in 2019 of the Musical.ly purchase. In recent years, CFIUS, which investigates overseas acquisitions of U.S. businesses, has taken a much more aggressive role in reviewing and approving deals that may threaten national security. It can recommend that the president block or unwind transactions.

It’s also possible that other potential buyers could come forward, said another person familiar with the discussions. Microsoft’s industry peers — Facebook Inc., Apple Inc., Amazon.com Inc. and Alphabet Inc. — fit the profile of potential suitors, though all are under antitrust scrutiny from U.S. regulators, which would likely complicate a deal.

A purchase of TikTok would represent a huge coup for Microsoft, which would gain a popular consumer app that has won over young people with a steady diet of dance videos, lip-syncing clips and viral memes. The company has dabbled in social-media investments in the past, but hasn’t developed a popular service of its own in the lucrative sector. Microsoft acquired the LinkedIn job-hunting and corporate networking company for $26.2 billion in 2016.

Microsoft can point to one acquisition that came with a massive existing community of users that has increased under its ownership — the 2014 deal for Minecraft, the best-selling video game ever.

Other purchases of popular services have gone less well. The 2011 pickup of Skype led to several years of stagnation for the voice-calling service and Microsoft fell behind newer products in the category. Outside of Xbox, the company hasn’t focused on younger consumers. A TikTok deal could change that, though, and give Microsoft “a crown jewel on the consumer social media front,” Dan Ives, an analyst at Wedbush Securities, wrote in a note to investors Friday.

TikTok has repeatedly rejected accusations that it feeds user data to China or is beholden to Beijing, even though ByteDance is based there. TikTok now has a U.S.-based chief executive officer and ByteDance has considered making other organizational changes to satisfy U.S. authorities.

“Hundreds of millions of people come to TikTok for entertainment and connection, including our community of creators and artists who are building livelihoods from the platform,” a TikTok spokeswoman said Friday. “We’re motivated by their passion and creativity, and committed to protecting their privacy and safety as we continue working to bring joy to families and meaningful careers to those who create on our platform.”

The mechanics of separating the TikTok app in the U.S. from the rest of its operations won’t come without complications. Unlike many tech companies in the U.S. where engineers for, say, Google, work on particular products like YouTube or Google Maps, many of ByteDance’s engineers work across its different platforms and services and continue to work on TikTok globally.