Tuesday, August 4, 2020
Time is almost up for the TikTok app following threats by President Trump of an immediate ban of the popular short video app in the United States. The President set a date of Sept. 15th for a “very American” company to negotiate a deal with TikTok or else the app disappears from US phones.
President Trump's concerns revolve around security threats and possible data mining of American citizens information by the Beijing government. The app houses over 80 million active users in the U.S. alone with former Disney exec Kevin Mayer as TikTok's CEO.
Despite Trump’s threats, TikTok US General Manager Vanessa Pappas posted a video response to the proposed ban and claims, “TikTok is not planning on going anywhere.”
In her video, Pappas mentions TikTok’s $1 billion dollar U.S. creator fund and plans to hire 10,000 employees across the country besides the company’s current 1,000 U.S. employees.
So far, Microsoft has come forth as the top contender to buy the app. In a company blog published following a conversation between Microsoft CEO Satya Nadella and President Trump, the company announced their continued negotiations toward the purchase of TikTok. Microsoft added that talks of purchasing the app are still preliminary and there “can be no assurance that a transaction which involves Microsoft will proceed” however the company went ahead and issued a formal notice to the Committee of Foreign Investment of their intent to buy TikTok parent company, ByteDance.
Microsoft shares jumped by almost 6% once the company confirmed it would move forward with talks to buy the US, Canada, Australia and New Zealand. According to Sensor Tower, the app has 226 million downloads in the four nations where Microsoft intends to take over. Upon purchase of the app, American TikTok users will be transferred and information stored outside of the country will be deleted.
If Microsoft strikes a deal by the September deadline, the potential acquisition of TikTok could be worth an estimated $200 billion in just three years. With vast amounts of valuable user data, Microsoft would become a serious threat to social media giant, Facebook. Trump’s terms for the US acquisition of TikTok would result in a “substantial portion” of the money from the purchase going directly back to the United States Treasury.
While the price tag for TikTok has not been disclosed, Microsoft is well suited to take on the financial liability for the app’s purchase however the company may be in over its head with the complicated handling of content moderation and the cost to curb the spread of misinformation, hate speech, nudity, copyright infringement and more.
Microsoft ended the blog update with “We do not intend to provide further updates until there is a definitive outcome to our discussions.”