The war over TikTok amps up

The war over TikTok amps up
Source: Bloomberg

With reports yesterday evening that TikTok’s American chief executive officer, Kevin Mayer, was resigning after less than four months in the role, the future of TikTok’s United States operations appears less clear than ever, as politicians and tech giants continue in their attempts to benefit from TikTok’s forced sale.

Although US tech giant Microsoft appeared to be the most likely to secure a deal earlier this month, news of any progress in the negotiations has been murky at best. There is still a high likelihood that Microsoft’s negotiations with TikTok owner ByteDance will fall apart.

It is clear from the latest developments, however, that the interventions of politicians, most prominently President Donald Trump, and rival tech companies have intensified the complexity of what is already a difficult and largely unprecedented situation.

Investment opportunity

Moves to secure the acquisition of TikTok’s US operations (as well as those of Canada, Australia and New Zealand) kicked off after claims from the Trump administration and others that TikTok was allegedly misusing US users’ data.

These claims materialized in a threat to ban the popular social media app, should its US operations not be secured by a “very American” company, according to President Trump.

According to a New York Times report, Microsoft was allegedly interested in investing in TikTok, not in acquiring its US operations outright. ByteDance reportedly welcomed the investment from the American tech giant, believing it would serve to reduce the political pressure they’d been facing.

This investment would’ve followed other efforts ByteDance had undertaken in recent months to appease critics of TikTok and pass itself off as more “American.” TikTok had already appointed an American CEO, former Disney executive Kevin Mayer, to achieve this end.

Reports of Microsoft’s mounting interest in acquiring the US operations of the social media app coincided with the growing pressure from the US government, which appeared increasingly likely to threaten a ban if no sale was achieved.

At this stage, however, Microsoft’s interest appeared unquestionable and the likelihood of its success in securing TikTok’s US operations unchallenged. One report in Bloomberg stated that Microsoft pulling off the deal would represent “a huge coup” that would give the social media company an edge over its rivals.

Forced sale

However, the recent intensification of political pressure has opened the door to new tech rivals challenging Microsoft’s interest, as a deadline for a sale draws ever closer.

According to The New York Times report, “what started as discussions about a small investment” between ByteDance and Microsoft, has now “morphed into a big, messy, political soap opera” due in part to unprecedented intervention on the part of President Trump.

The pressure has mounted as of late, complicating what is already a delicate and complex deal that could fall through at any moment.

An Executive Order issued August 6 threatened to ban TikTok over national security concerns, with an initial deadline for a sale set as September 15 to avert a ban. This was extended to November, but the president has further complicated matters by demanding a “cut” of any proceeds of the deal directly to the US Treasury.

Outside of the US, it has also emerged that TikTok is under investigation by a French data privacy regulatory body, which is inquiring into how TikTok complies with the EU’s stringent General Data Protection Regulation (GDPR) law.

Recent reports that TikTok tracked Android users for months, before stopping late last year, will do little to cause the political and regulatory pressure on the company to cease, nor will it combat the perception that TikTok misuses user data.

With the pressure mounting, it is now no longer clear if Microsoft is a shoo-in to secure TikTok’s US operations. According to a series of reports, new competitors have revealed themselves, suggesting additional interest in the tech industry in acquiring the social media app.

Twitter is reportedly among those interested. The social media platform would appear to be a natural choice to acquire TikTok’s operations, with its main operations and experience already in the social media field.

More surprisingly, however, is the interest shown by Oracle, the American computer software company. Oracle does not appear to be a natural fit for acquiring TikTok, as it has little social media experience.

Yet reports of Oracle’s interest appear genuine. Oracle has reportedly held talks with ByteDance and is working with several venture capital firms to acquire TikTok’s operations in the US, Canada, Australia and New Zealand.

Oracle’s interest likely comes as a direct result of Trump’s interventions. Oracle CEO Larry Ellison is a strong supporter of the president and held a fundraiser for his reelection campaign as recently as February.

Oracle may fit the bill for Trump’s requirement of a “very American” company to secure TikTok’s operations, with the president himself already stating that Oracle is a “great company” and “would be certainly somebody that could handle” acquiring and operating TikTok.

TikTok fights back

Despite the mounting pressure, TikTok itself has not been silent.

The social media platform recently launched a new website and Twitter account, aimed at countering “misinformation” of the app’s operations, in particular, its usage of its users’ data.

The app is also trying to save its operations in India, its most popular non-China market, just as it’s facing mounting existential pressure in the US. TikTok was already included as part of a June 29 ban by India’s government that targeted Chinese-made apps amid rising geopolitical tensions between the two countries.

TikTok is now in talks with Reliance Industries, India’s largest and richest company, to secure its operations for its 200 million Indian users and to prolong the life of the app in the country.

TikTok is also taking the fight directly to the Trump administration. The company recently filed a suit in a US federal court arguing that President Trump’s decision to ban the app through an Executive Order deprived it of due process and the space to dispute the claims Trump has leveled at it.

Though Microsoft was at one stage the likeliest contender to secure TikTok’s US operations, Microsoft co-founder Bill Gates has himself already referred to TikTok’s acquisition as a potential “poisoned chalice.”

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