ByteDance races to salvage TikTok deal after Trump vows ban
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ByteDance, the Chinese owner of TikTok, is racing to save the video-sharing app’s US operations by making a last-ditch plea to the Trump administration to allow it to sell the unit to Microsoft.
ByteDance has told the White House it is willing to divest its US operation in full through a sale, according to people with direct knowledge of the matter, after US president Donald Trump vowed to ban the app in the US.
A US national security review has deemed TikTok a risk to Americans’ personal data, and Mr Trump said a sale to any party — including Microsoft — would not be an acceptable solution. “We are not an M&A [mergers and acquisitions] country,” the president said.
The comments left some involved in the talks between Microsoft and ByteDance fearing that any hope of a deal had collapsed.
However, others — including ByteDance executives — believe that Mr Trump’s intervention was a negotiating ploy intended to compel the Chinese group to sell the US business in full and at a lower price than it had been holding out for from Microsoft.
“As far as TikTok is concerned we’re banning them from the United States,” Mr Trump told reporters on Air Force One late on Friday, adding that he could use executive powers to formalise the decision.
US Treasury secretary Steven Mnuchin did not go as far in an interview on Sunday. The US government’s Committee on Foreign Investment in the US, or Cfius, which is led by the Treasury department, has been undertaking a review of TikTok’s status in recent weeks on national security grounds.
“The entire committee agrees that TikTok cannot stay in the current format because it risks sending back information on 100m Americans [to China],” Mr Mnuchin told ABC’s This Week.
“The president can either force a sale or the president can block the app . . . and I’m not going to comment on my specific discussions with the president, but everybody agrees it can't exist as it does.”
There is no guarantee that Microsoft and ByteDance will reach a deal, even if allowed. The two sides have been secretly discussing a transaction over the past few weeks, according to multiple people involved.
Microsoft president Brad Smith visited officials in Washington last month to see if a takeover of the business by the US company would address the government’s concerns over TikTok, some of these people said.
Microsoft would be buying Tikok’s US operations — including 1,500 staff, intellectual property and technology — but the app’s 100m American users would still be able to access content from non-US users through a sharing agreement with ByteDance, according to a person familiar with the plan.
Microsoft has a limited presence in social media and believes a deal would allow it to enter a category dominated by rivals such as Facebook, one person added.
In private, TikTok executives and investors have speculated that Facebook, which is preparing to unveil a rival product in America as soon as this week, has been lobbying the US government behind closed doors to ban the app.
The exact price under discussion is not clear, but is believed to be in the range of between $15bn and $30bn, one person said. Another person said that there had been no agreement on price or terms yet and characterised the discussions as “preliminary”.
It also remained unclear how TikTok would separate its US operations from its European and Asian arms. The offer to divest the US operations in full was first reported by Reuters.
The review by Cfius followed growing concerns over the company’s Chinese roots and data-gathering practices.
As well as considering an outright ban, and a spin-off to a US buyer, the Trump administration has also weighed whether to place TikTok on the so-called entity list run by the Department of Commerce, to restrict its ability to do business in the US.
In an apparent bid to assuage the concerns of its US users, Vanessa Pappas, general manager for TikTok US, posted a video on TikTok on Saturday in which she said: “We’re not going anywhere . . . We’re here for the long run.”
The company also put out a statement on Friday saying: “TikTok US user data is stored in the US, with strict controls on employee access. TikTok’s biggest investors come from the US. We are committed to protecting our users’ privacy and safety as we continue working to bring joy to families and meaningful careers to those who create on our platform.”
ByteDance has also been in talks with a group of its existing investors, including Sequoia Capital and General Atlantic, about a deal to spin out TikTok. Some of those US investors may be able to take minority stakes under the terms of the proposal put to the White House, one person said.
Additional reporting by Miles Kruppa