Donald Trump has given the final ultimatum to TikTok before he bans its operation in the U.S.
Trump said on Monday that the U.S. government should get a sizable portion of the sales price. If the sale is not agreed by September 15, he will ban the TikTok service.
Microsoft’s stock has rallied on the back of the potential deal. Microsoft could be paying as much as $50 billion.
What Is Tiktok?
Tiktok is a short video sharing app, and ByteDance is its parent company.
Why Is TikTok popular?
Short-form video-sharing apps have been immensely popular among millennials and Z-gens. TikTok’s platform is different from Facebook, Snapchat, and Instagram because it is more engaging and trendsetting. It is estimated that TikTok has over half a billion active users worldwide and nearly 80 million in the U.S.
Why Does Trump Want To Ban TikTok?
Trump wants to ban the TikTok app, and this can happen today. President Trump stated that TikTok is a threat to national security. U.S. officials are concerned that Chinese authorities could potentially be collecting data on Americans using TikTok’s application.
Kevin Mayer, CEO of TikTok, said TikTok would never share personal data, and the company is fully committed to transparency. The company said in a statement, “TikTok’s U.S. user data is stored in the U.S., with strict controls on employee access.”
There is a theory circulating among Tiktok users that the reason Trump wants to ban the app is because of his rally in Tulsa, Oklahoma, in June. The event should have been a big hit for Trump’s election campaign, with an estimated 20,000 people in attendance. However, the event’s attendance was immensely underwhelming. It was ruined by TikTok users and other youths who registered for tickets but never showed up. The event made the Trump campaign appear weak, but the reality could be that many individuals didn’t show up due to Covid-19.
The theory is that Trump wants revenge, and banning the app in the U.S. is retaliatory. As I said, it is only a theory, and no one really knows the actual reason behind his attempt to ban TikTok.
Something that deserves attention is that ByteDance, TikTok’s parent company, employs nearly 1,000 Americans in the U.S. TikTok has indicated a plan to increase its staff in the U.S.
According to TikTok, “We’ve hired nearly 1,000 people onto our U.S. team this year alone and are proud to be hiring another 10,000 employees into great paying jobs across the U.S. Our $1bn creator fund supports U.S. creators who are building livelihoods from our platform.”
The company also said, “TikTok’s biggest investors come from the U.S.”
Jobs are very important for Trump, and if jobs are the number one priority, then the president must think carefully about his decision to ban TikTok.
Can President Ban Tiktok?
President Trump believes that he has the power to ban TikTok in the U.S. and stated it could be done through executive actions. Trump thinks that he can use “emergency economic powers or an executive order”.
Another possibility is that he will force the app stores to drop the TikTok app.
Microsoft and TikTok
U.S. tech giant, Microsoft, confirmed that it is continuing its talks to purchase the U.S.’s operation of TikTok. Microsoft’s CEO, Satya Nadella, had a conversation with Trump about this matter on Sunday. A Microsoft blog post said that a full economic plan would be provided to the U.S. government. The company also stressed that it understands the importance of the president’s data concerns.
Microsoft is hoping to conclude their conversation with ByteDance by September 15. The company wants to purchase the TikTok services in the U.S., Canada, Australia, and New Zealand.
Why Microsoft Wants To Buy Tiktok?
Selling TikTok to Microsoft, which already owns LinkedIn, will give a massive competitive advantage in the social media—an area where Microsoft hasn’t had much dominance.
The value of the U.S.’s TikTok operation has been estimated between $10 billion to $30, which is a very large range. Anything less than the current range could increase Microsoft’s stock value as that would be considered a bargain. Any amount that is above the range could add temporary selling pressure to Microsoft stock because it would be deemed an expensive deal.
Could there be other Bidders?
Yes, of course. But right now, it is more about Microsoft, and this is the company that has put its foot forward. But remember, the CEO of TikTok comes from Disney, and Disney is already in the business of content creation. It’s also looking to diversify its operation. The acquisition of TikTok would give Disney a competitive edge as it would have access to user data. Verizon is another company that could potentially enter this race.