Microsoft May Acquire TikTok's US Operations As Trump Seeks To Ban The App For China Roots

TikTok has faced massive backlash from several governments in the midst of anti-China sentiments and reports of security loopholes in the app. Indian government, for instance, recently banned the app in the country citing data security concerns. The US is expected to follow suit.

A possible saviour for the app has now come to light, which can prevent a similar fate for the app in the US as in India. The saviour is none other than technology giant Microsoft Corp.

Microsoft Corp is reportedly in talks for an acquisition of TikTok in the U.S. A recent report by Bloomberg hints at the acquisition citing people familiar with the matter. The deal, if followed through, will be a major breakthrough for both Microsoft and TikTok.

What Microsoft stands to gain

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Despite being a technology giant that still sits in the top ranks of the US stock market, Microsoft has had no luck with a popular consumer front in the smartphone segment. Though the company made consistent efforts to have its own smartphone platform, including operating systems as well as devices of its own, it eventually shut down the operations after it seemingly lost the race to rivals Google and Apple.

If Microsoft manages to acquire TikTok, it would mark a massive re-entry of the tech giant on social media and consumer front, especially in an audience of young. With TikTok¡¯s monthly active users of 800 million prior to the bans, 26.5 million of which are from the US, Microsoft will easily have an ace up its sleeve to show in the stock market.

For similar reasons, other tech giants like Apple, Facebook and Google are also potential buyers of the Chinese app¡¯s US operations. But since these face a regulatory trial in the US, none of them are expected to make a move that is muddled with national security concerns.

Fighting global sentiments

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US President Donald Trump¡¯s administration is in the process of deciding whether to ban the Chinese app in the states or not. The decision will be based on an investigation looking into the potential national security risks from the app, primarily due to its Chinese owner ByteDance Ltd.

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

Apart from the security risks on the app which have been pointed out time and again, even by the renowned hacker group Anonymous, there is a growing sentiment across the globe to boycott Chinese goods and services. The opinion follows a blame of the spread of the pandemic from the country as well as its recent military clash on the borders with India.

A report by Counterpoint highlights that the ban on TikTok and other Chinese apps in India alone could cost them $70 million to $100 million in revenue annually. A ban in the US will only worsen the situation for TikTok.

Ray of hope for TikTok

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If the POTUS decides to ban the app altogether, that would be a hard goodbye for the app from yet another country. There is, however, an alternative that the involved entities are looking at. A possibility wherein ByteDance Ltd might be asked to divest its stake in the app in exchange of letting it operate in the country.

In this case, Microsoft¡¯s acquisition of the app, if and when it takes place, will be easier. Though separating the TikTok app in the U.S. from the rest of its operations won¡¯t be easy, the Bloomberg report points out. This is because several of ByteDance¡¯s engineers work across platforms, of which TikTok is just one entity. A dedicated team working on TikTok in the US might have to be built from the ground up.