Trump to Demand TikTok’s Chinese Owner Divest App, With Microsoft Reportedly in Acquisition Hunt

Todd Spangler
·4 min read

Donald Trump is gearing up to issue an order requiring ByteDance to sell its ownership interest in TikTok, according to multiple reports — otherwise, he’s threatened to ban the short-form video app in the U.S. over security concerns related to its ties to China.

At the same time, Microsoft is currently in talks to buy TikTok, as first reported by Fox Business, citing anonymous sources. TikTok, which lets users record, share and watch short-form lip-sync clips and other videos, has surged in popularity over the past two years, particularly among Gen Z users.

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As U.S. president, Trump previously has issued three orders stopping M&A deals involving foreign parties, through the inter-agency Committee on Foreign Investment in the United States (CFIUS). Per the Wall Street Journal, those cases involved blocking a private-equity firm with ties to the Chinese government from buying U.S. chip maker Lattice Semiconductor; barring Singapore-based Broadcom from acquiring Qualcomm; and ordering China-based Beijing Shiji Information Technology to sell its ownership in software company StayNTouch.

It was already public that the Trump administration government was considering banning TikTok over security concerns related to TikTok’s Chinese ownership, as Secretary of State Mike Pompeo said earlier this month. TikTok has said it has never shared data with Chinese authorities “nor would we do so if asked.”

“We’re looking at TikTok. We may be banning TikTok,” Trump said, speaking to reporters Friday. “We may be doing some other things. There are a couple of options. But a lot of things are happening, so we’ll see what happens. But we are looking at a lot of alternatives with respect to TikTok.”

In a statement to Variety, a TikTok rep said: “While we do not comment on rumors or speculation, we are confident in the long-term success of TikTok. 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. 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.”

Microsoft declined to comment.

A deal by Microsoft for TikTok’s U.S. operations would “resolve the security issues with this app” and also give the software giant an immediate inroad into social media, according to Wedbush Securities analyst Dan Ives wrote.

“For Microsoft, this would be a big bet on the consumer social-media space, which the company has stayed away from over the last decade,” Ives wrote in a research note Friday. An acquisition of TikTok, or a strategic investment, “would be Microsoft throwing its hat in the ring and trying to compete with other tech giants such as Facebook in a new avenue of growth for the next decade for its consumer business.”

A group of ByteDance investors including Sequoia and General Atlantic, who want to acquire control of TikTok amid the concerns over its Chinese ownership, have valued TikTok at about $50 billion, Reuters reported.

TikTok recently hired former Disney exec Kevin Mayer as CEO. Earlier this week, Mayer responded to the U.S. government’s heightened scrutiny of its Chinese ties and security concerns, announcing that TikTok will provide greater transparency into its operations by publicly disclosing the app’s algorithms, moderation policies and data flows.

The U.S. is TikTok’s largest market in terms of recent app installs (excluding third-party Android marketplaces in China), according to research firm Sensor Tower. In July to date, TikTok has been installed 63.2 million times from Apple’s App Store and Google Play globally, with the U.S. accounting for 6.1 million of those, or about 10%.

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