TikTok Q&A: Why Microsoft and Trump Control the Fate of 2020's Hottest App
By Bowdeya Tweh
The battle over the future of TikTok -- the fast-growing
short-form video app -- is continuing this week as ByteDance Ltd.,
tech giant Microsoft Corp., and the Trump administration discuss
outlines of a deal that could hive off TikTok's U.S.
President Trump said Monday he is open to a deal in which
Microsoft or another U.S. company buys TikTok after last week
signaling opposition to it. But he said the government should
receive payment for clearing a purchase.
Here is a look at the state of play regarding TikTok ownership
and what the prospects could be for a deal.
Why is TikTok potentially being sold?
TikTok parent ByteDance Ltd., a Beijing-based company, has
mulled a range of options in recent months to assuage concerns from
officials in the U.S. and other countries about the service's ties
to China. Secretary of State Mike Pompeo last month raised the
possibility of banning TikTok in the U.S., following a similar
action taken by authorities in India in June.
Before Mr. Pompeo's announcement, ByteDance senior officials had
discussed creating an independent management board and other
actions to distance the app's operations from China, The Wall
Street Journal reported last month. ByteDance in May hired Walt
Disney Co. executive Kevin Mayer as TikTok's chief executive.
Concerns about a potential U.S. ban, in part, drove discussions
to explore a deal. Though ByteDance had multiple suitors for
TikTok, CEO Zhang Yiming zeroed in on Microsoft.
The Redmond, Wash., software giant on Sunday said it is
interested in buying TikTok's U.S. business -- as well as the app's
service in Canada, Australia and New Zealand -- and is willing to
try to address the White House's concerns, though it warned that it
would walk away from talks by Sept. 15 if a deal isn't
What exactly are the security concerns around TikTok?
U.S. officials have said they are concerned TikTok -- which has
hundreds of millions of users world-wide, and about 100 million in
the U.S. -- could provide data collected from American users to
China's authoritarian government. TikTok has said it would never do
so. Officials also worry that the app could be used to spread
Chinese propaganda and that the platform's moderators are censoring
content to appease Chinese government leaders. TikTok has also said
the Chinese government hasn't asked TikTok to censor content and
that content-moderation rules aren't influenced by any
The TikTok app collects information such as location data and
tracks the type of device you are using to access the platform.
TikTok also stores your browsing and search history as well as the
content of messages you exchange with others on the app.
Why might Microsoft buy TikTok?
The purchase of TikTok's U.S. operations, a deal that would
likely cost billions of dollars, would bring a huge pool of mostly
young users to a company that has thrived during Microsoft Chief
Executive Satya Nadella's tenure largely by focusing on corporate
Microsoft would likely invest to grow the app's user base as
well as its relationships with advertisers as it competes with the
likes of platforms owned by Facebook Inc., Twitter Inc., Snap Inc.
and others. TikTok globally isn't profitable though Microsoft has
deep pockets to invest in the platform. Microsoft could leverage
its pool of TikTok's mostly younger users to bolster its Xbox
videogame business and its advertising business, which currently
centers on its Bing search engine.
How is news of the potential sale being received in China?
The potential sale is hardening suspicions of some in China that
the U.S. is trying to sabotage efforts to nurture homegrown
technology enterprises, with TikTok being among the country's first
apps that is a global smash hit. The partial or complete sale of
TikTok has also raised concerns about the precedent a deal could
set for Chinese companies with global ambitions as U.S.-China
relations unravel. "Stop politicizing economic and trade issues,
stop abusing the concept of national security and stop pursuing
policies of discrimination and exclusion," Chinese Foreign Ministry
spokesman Wang Wenbin said at a briefing in Beijing Monday, in
words aimed at Washington.
What do TikTokers make of it?
It has been a mix of the platform's typical irreverence,
impassioned pleas to preserve the app and TikTokers urging
followers to follow them on other platforms. But largely, users
have said they aren't quitting the app. Some offered tips on how to
use a virtual private network to mask the country where the app is
truly being accessed, while others pretended to relocate to a
Despite the commitment of TikTokers to the current platform,
other companies are circling its users. Facebook's Instagram has
been courting users to join its upstart Reels short-form video
service, which will soon debut in the U.S.
Write to Bowdeya Tweh at Bowdeya.Tweh@wsj.com
(END) Dow Jones Newswires
August 03, 2020 19:11 ET (23:11 GMT)
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