Donald Trump said that the Chinese video sharing company Tik Tok has until September 15, 2020 to find a U.S. buyer or else, Tik Tok will be forced by the Trump administration to cease its U.S. operations.
This follows a negotiation between Microsoft company executives and high ranking officials from the White House. Donald Trump was speaking at the Situation Room in the WhiteHouse during a press conference regarding coronavirus.
According to NBC, Microsoft plans to move very quickly in its negotiations to acquire Tik Tok and expects to have closed the deal by mid-September or sooner than that.
The United States is weary of Chinese technology companies and fears that the Communist Government in Beijing may use Tik Tok to gain access to American citizens’ personal data especially during this presidential election season. The Chinese company has countered these fears by saying that they are an independent company and that the Chinese government has no access to the company’s data.
The short-video sharing app Tik Tok is very popular among teenagers not only in the United States, but also around the world. Below, is a graph showing the most popular social media apps among young people in the United States.
The United States government had early own said it will not entertain the idea of an American company acquiring Tik Tok, but it looks like the warm relations that Trump and several Microsoft leaders including Bill Gates enabled him to change his mind about the issue. President Trump’s government is well known to be friendly towards Microsoft.
In late 2019, the federal government awarded Microsoft Pentagon’s $10 billion Jedi project despite Amazon Web Services being able to offer the government a better deal than Microsoft. Amazon went to court to challenge the offer of the tender saying that the process was done in a biased manner.
Upon successful acquisition of Tik Tok, Microsoft promised to ensure that all data pertinent to the American users of the app will be transferred to servers located in the United States. The data that cannot be repatriated to the United States will be deleted by Microsoft whenever they are around the world.
Microsoft said it will also acquire Tik Tok’s operations in Canada, Australia and New Zealand. The software company invited other U.S. companies interested in the deal to bid for a minority ownership after it secure the acquisition of the Chinese app company.
Tik Tok is rumored to be valued between $30-50 billion. If Microsoft successfully acquire the app company will it be the biggest acquisition in Microsoft’s history? Well, we will not know until the deal is finalized. But below is a graph showing Microsoft’s previous acquisition and how much the software company paid to purchase these companies:
It is worth noting that the United States is not the only company that is uneasy about Tik Tok’s potential national security risks. Last month, the Indian government in Delhi banned Tik Tok throughout India due to the same reason. This follows a skirmishes between the Indian Army and the Chinese Army on a border in the Northern part of Kashmir. During this conflict, more than 20 Indian soldiers were shot dead by the Chinese Army.
Tik Tok’s ban in the United States is significant because after the app was banned in India, the country had the highest download of the app in the whole world followed by the United States in second place. Below is a Statista graph showing the countries where the app was downloaded most before the purge of the app began: