Microsoft loses in its bid to purchase TikTok

Photo (c) Anatoliy Sizov - Getty Images

Oracle will reportedly buy TikTok’s U.S. operations instead

Microsoft will not be purchasing TikTok, the popular video-sharing app. The company says its offer for TikTok’s U.S. operations was rejected by the app’s owner, ByteDance.

“We are confident our proposal would have been good for TikTok’s users while protecting national security interests,” Microsoft said in a statement. “To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation, and we made these principles clear in our August statement.”

President Trump had previously threatened to take action to shut down TikTok’s U.S. operations on national security grounds. In early August, he signed an executive order that would ban both TikTok and social media platform WeChat within 45 days.

National security concerns

The Trump administration has expressed concern that the Chinese apps could gather data from U.S. users and share it with the Chinese government.  

“This data threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information – potentially allowing China to track the locations of Federal employees and contractors, build dossiers of personal information and blackmail, and conduct corporate espionage,” the president’s order said.

In late August, Walmartjoined the bidding frenzy to buy TikTok. Retail analysts called it a bold move since it had the potential to expose millions of young consumers to the Walmart brand.

Oracle reported emerges as the winner

In the end, it appears that Oracle may have emerged as the winner. The Wall Street Journal reports that Oracle’s bid for TikTok’s U.S. operations topped Microsoft’s. The Journal’s report cites people knowledgeable about the situation as saying the deal might not be structured as an outright sale.

It’s not clear, however, if that would fly at the White House. Any deal would have to gain the approval of the Trump administration and the Committee on Foreign Investment in the U.S.

The Chinese government may be another factor in whether a deal goes through. China appeared hostile to any deal last month when it enacted new export restrictions on the technology that powers the TikTok platform. Those algorithms determine what videos TikTok users see.

CNBC reported late last week that the Chinese government would rather suspend TikTok’s operations in the U.S. than submit to a sale forced by the U.S. government.

TikTok is a short-form, video-sharing app that allows users to create and share 15-second videos on any topic. It is wildly popular with American teenagers and is promoted as a video-sharing social network.

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