TikTok's parent agrees to divest US ops after Trump threatens ban

Proposed deal would see ByteDance exiting completely and Microsoft taking over

WASHINGTON • Chinese technology firm ByteDance has agreed to divest the US operations of TikTok completely in a bid to save a deal with the White House, after US President Donald Trump on Friday said he had decided to ban the popular short-video app, two people familiar with the matter said yesterday.

US officials have said TikTok, under its Chinese parent, poses a national risk because of the personal data it handles.

ByteDance's concession will test whether Mr Trump's threat to ban TikTok is a negotiating tactic or whether he is intent on cracking down on a social media app that has up to 80 million daily active users in the US.

Mr Trump told reporters on board Air Force One on Friday that he would issue an order for TikTok to be banned in the US as early as yesterday. "Not the deal that you have been hearing about, that they are going to buy and sell... We are not an M&A (mergers and acquisitions) country," he said.

ByteDance was previously seeking to keep a minority stake in the US business of TikTok, which the White House rejected.

Under the new proposed deal, ByteDance would exit completely and Microsoft would take over TikTok in the US, the sources said.

Some ByteDance investors that are based in the US may be given the opportunity to take minority stakes in the business, the sources added. About 70 per cent of ByteDance's outside investors come from the US.

The White House declined to comment on whether Mr Trump would accept ByteDance's concession. ByteDance in Beijing did not respond to a request for comment.

Under ByteDance's new proposal, Microsoft will be in charge of protecting all US user data, the sources said.

The plan allows for another US company other than Microsoft to take over TikTok in the US, the sources added.

Microsoft did not respond to a request for comment.

Under the new proposed deal, ByteDance would exit completely and Microsoft would take over TikTok in the US, the sources said.

Some ByteDance investors that are based in the US may be given the opportunity to take minority stakes in the business, the sources added. About 70 per cent of ByteDance's outside investors come from the US.

 
 
 

Mr Trump's threat to ban TikTok came after a review by the Committee on Foreign Investment in the US (CFIUS), which investigates deals affecting US national security.

TikTok last week pledged a high level of transparency, including allowing reviews of its algorithms, to assure users and regulators.

"We are not political, we do not accept political advertising and have no agenda - our only objective is to remain a vibrant, dynamic platform for everyone to enjoy," TikTok chief executive Kevin Mayer said last week.

"TikTok has become the latest target, but we are not the enemy."

Earlier last month, US Secretary of State Mike Pompeo told Fox News that the government was "looking at" banning the app in the US.

The comments prompted popular TikTokers to consider migrating to platforms such as YouTube, The New York Times reported.

Late on Friday, TikTok users reacted furiously to the news, telling their fans to follow them on different platforms and criticising the US President.

The popularity of the platform surged after ByteDance acquired US-based app Musical.ly in 2017 and merged it with its own video service.

Dr James Lewis, head of the technology policy programme at the Centre for Strategic and International Studies, said he believes that the security risk of using TikTok is "close to zero", but that ByteDance could face pressure from China to engage in censorship.

 
 
 

He said the US authorities under CFIUS have the power to unwind an acquisition previously approved and that a similar action was taken last year with dating app Grindr after it was bought by a Chinese firm.

India has already barred TikTok over national security and privacy concerns, while other countries are reportedly mulling over similar measures.

AGENCE FRANCE-PRESSE, REUTERS

A version of this article appeared in the print edition of The Sunday Times on August 02, 2020, with the headline 'TikTok's parent agrees to divest US ops after Trump threatens ban'. Print Edition | Subscribe