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Wednesday, August 12, 2020  Spokane, Washington  Est. May 19, 1883
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Microsoft leading suitor to purchase TikTok

UPDATED: Fri., July 31, 2020

Microsoft CEO Satya Nadella is shown on May 7, 2018. President Donald Trump may force China’s ByteDance to sell TikTok and Microsoft is reportedly the leading suitor.  (Associated Press)
Microsoft CEO Satya Nadella is shown on May 7, 2018. President Donald Trump may force China’s ByteDance to sell TikTok and Microsoft is reportedly the leading suitor. (Associated Press)
By Ellen Nakashima, Rachel Lerman and Jeanne Whalen Washington Post

President Donald Trump plans to sign an order forcing China’s ByteDance to sell off the U.S. portion of TikTok, and Microsoft is the leading suitor in contention to purchase it.

The divestiture order is coming as soon as today, according to current and former U.S. officials, who spoke on the condition of anonymity because they were not authorized to discuss it publicly. One of the individuals confirmed Microsoft was in the lead to acquire the popular short-form video platform’s U.S. service.

“We may be banning TikTok,” Trump told reporters before leaving for Florida on Friday. “We may be doing some other things. There are a couple of options. But a lot of things are happening, so we’ll see what happens. But we are looking at a lot of alternatives with respect to TikTok.”

The decision to force a sale comes amid growing concern that the Chinese government could access users’ private data. TikTok has disputed the claims throughout the U.S. government’s investigation.

The Committee on Foreign Investment in the United States began investigating an acquisition by Beijing-based ByteDance after lawmakers asked the government to step in over national security concerns. ByteDance bought karaoke app Musical.ly in 2017 and merged it with TikTok, launching the app to mass popularity in the United States.

A TikTok divestiture order would be the latest sign of the Trump administration’s increasingly strident stance on China and its tech companies.

Tension has already come to a head over Chinese telecom giant Huawei, the world’s largest provider of mobile network gear – a field from which U.S. companies are largely absent. The United States calls Huawei a security risk, which the company denies, and has undertaken an international lobbying campaign to persuade other countries not to buy from Huawei.

The Trump administration has also targeted other Chinese companies, restricting trade with more than a dozen it accuses of supplying surveillance gear in the western province of Xinjiang, where U.S. officials and human rights groups say China’s ruling Communist Party is holding Muslims in mass detention camps.

TikTok spokesperson Hilary McQuaide declined to comment, but she said they are “confident in the long-term success of TikTok.” Microsoft spokesman Frank Shaw declined to comment.

Bloomberg first reported the news on the divestiture.

TikTok has continually insisted that it does not hand over information to the Chinese government.

“We have never provided user data to the Chinese government, nor would we do so if asked,” McQuaide said earlier this month.

The TikTok news follows several other Trump administration efforts to use CFIUS to scrutinize, block or reverse Chinese acquisitions.

CFIUS, an interagency body whose powers were strengthened by 2018 legislation, recommends to the president whether certain proposed takeovers should be rejected, and whether completed takeovers should be reversed, on national security grounds.

TikTok has tried in recent months to convince U.S. users and regulators of its strong ties to the country. It emphasizes that it has hundreds of employees in the United States and even hired former Disney executive Kevin Mayer to be its new chief executive in May.

The app, which lets users create and post short videos with music and other effects, has surged in popularity even more during the coronavirus pandemic as people search for at-home activities and distractions.

Teens are especially active on TikTok, creating videos showcasing their dancing, pranks and cooking skills.

In March, Trump ordered a Chinese company to divest all ownership of a U.S. hotel-software company, saying the Beijing investor could harm U.S. national security. A written order from the president’s office suggested the administration was concerned about Chinese access to StayNTouch’s hotel-guest data.

The order, which followed a CFIUS review, instructed the Chinese company to immediately to refrain from accessing any of StayNTouch’s hotel-guest data.

The Chinese company, Beijing Shiji Information Technology, acquired StayNTouch in 2018, saying the U.S. company’s software was used in connection with 90,000 hotel rooms globally.

After the order was issued, Beijing Shiji said it was “not a threat to U.S. security in any way.”

“We offered a range of significant proposals to mitigate any concerns the U.S. government might have, including further restricting access to guest data and appointing an independent monitor to ensure these protections. Unfortunately, those offers were rebuffed,” the company said at the time.

In 2018, after a CFIUS review, Trump ordered Singapore-based Broadcom to abandon its $117 billion bid for the U.S. semiconductor company Qualcomm, blocking what would have been one of the biggest technology deals in history.

When Secretary of State Mike Pompeo said earlier this month that the United States is “certainly looking at” banning TikTok, frantic users took to the app to bemoan its potential demise and urge followers to find them on other social media sites.

“I really hope that this will not happen,” one user said in a video. “All the videos, all the memories of you. This can’t be true.”

Amazon even briefly prohibited employees from keeping the app on the phones they use for work, though the company quickly said that the directive was an error.

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