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TikTok Rejects Microsoft Takeover Offer

September 14, 2020 8:06 am

Beijing (PingWest)—ByteDance, the parent company of TikTok, has rejected Microsoft's offer to buy the short video app's US operation.

“ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft,” Microsoft said in a blog post released on Sunday night. “We are confident our proposal would have been good for TikTok’s users, while protecting national security interests. 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. We look forward to seeing how the service evolves in these important areas.”

That leaves Oracle as the sole publicly known remaining bidder for TikTok, which faces a September 20 deadline to sell its US operation or will be banned by the Trump administration.

Previously, Microsoft, which was bidding with Walmart, and Oracle, which gets support from venture capitalists such as Sequoia Capital, have conducted in-depth negotiations on the acquisition of TikTok in the US. 

ByteDance has indicated that Oracle would be its “technology partner,” but it was unclear whether that meant it would also take a majority ownership stake of the app, New York Times reported, citing people familiar with the matter.

Recently-revised Chinese tech-export rules may have hindered the transaction. On August 28, the Ministry of Commerce and the Ministry of Science and Technology added a total of 23 items subject to export restrictions, including AI, algorithms, and other technologies considered sensitive by China. Therefore, ByteDance, the Beijing-headquartered tech unicorn, has to obtain permission from Chinese authorities before selling TikTok to an American company. 

According to a Reuters report on Friday, Chinese government opposes a forced sale of TikTok’s US operations and would prefer to see the short video app shut down in the US.

TikTok, the widely popular video-sharing app, has more than 100 million users in the US, however, pressure from the Trump administration is limiting its growth. In August TikTok's four major competitors have seized 44% of the US market share, thus reducing the share of TikTok by 20%, data from Sensor Tower shows.