China’s ByteDance has agreed to divest the US operations of TikTok completely in a bid to save a deal with the White House, after Donald Trump said on Friday he had decided to ban the popular short-video app, two people familiar with the matter said on Saturday.
US officials have said TikTok under its Chinese parent poses a national risk because of the personal data it handles. ByteDance’s concession will test whether Trump’s threat to ban TikTok is a negotiating tactic or whether he is intent on cracking down on a social media app that has up to 80 million daily active users in the US.
ByteDance was previously seeking to keep a minority stake in the US business of TikTok, which the White House had rejected. Under the new proposed deal, ByteDance would exit completely and Microsoft would take over TikTok in the United States, the sources said. Some ByteDance investors that are based in the United States may be given the opportunity to take minority stakes in the business, the sources added.
The White House did not respond to a request for comment on whether Trump would accept ByteDance’s concession. ByteDance in Beijing did not respond to a request for comment.
Microsoft did not respond to a request for comment.
Trump told reporters onboard Air Force One late on Friday that he would issue an order for TikTok to be banned in the United States as early as Saturday. “Not the deal that you have been hearing about, that they are going to buy and sell … We are not an M&A [mergers and acquisitions] country,” Trump said.
The White House declined to comment on whether Trump would accept ByteDance’s concession. ByteDance in Beijing did not respond to a request for comment.
Under ByteDance’s new proposal, Microsoft would be in charge of protecting all US user data, the sources said. The plan allows for another US company other than Microsoft to take over TikTok in the United States, the sources added.
As relations between the United States and China deteriorate over trade, Hong Kong’s autonomy, cyber security and the spread of the novel coronavirus, TikTok has emerged as a flashpoint in the dispute between the world’s two largest economies.
ByteDance has been considering a range of options for TikTok amid US pressure to relinquish control of the app, which allows users to create short videos with special effects and has become wildly popular with US teenagers.
ByteDance acquired the Shanghai-based video app Musical.ly in a $1bn deal in 2017 and relaunched it as TikTok the following year. ByteDance did not seek approval for the acquisition from the Committee on Foreign Investment in the United States (CFIUS), which reviews deals for potential national security risks.
Reuters reported last year that CFIUS had opened an investigation into TikTok.
The United States has been increasingly scrutinizing app developers over the personal data they handle, especially if some of it involves US military or intelligence personnel. Ordering the divestment of TikTok would not be the first time the White House has taken action over such concerns.