14 DAY TRIAL // Microsoft has recently confirmed that the TikTok takeover talks failed, which means the world’s number one software company won’t be able to purchase the Chinese Internet phenomenon and the negotiations have already stopped.
Previously, Microsoft revealed that an agreement with TikTok would be reached by September 15, the deadline that the U.S. President Donald Trump announced for the takeover talks to be complete. If an American company doesn’t take over TikTok, the service would be banned in the United States, President Trump warned on several occasions.
Microsoft hasn’t provided on why the negotiations failed.
“ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft. 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,” the company said in a press statement today.
TikTok parent company ByteDance is yet to announce its long-term plans for the service, but right now, there are three options that it can embrace in the United States.
First of all, it can reject the takeover offers from American companies thus face the ban that President Trump has announced on so many occasions. In other words, TikTok faces the risk of getting banned in the U.S., despite the company already announced that it’s ready to challenge such sanctions in court.
China itself has already revealed that it wouldn’t accept TikTok to be taken over by an American company with such a hostile approach, so there’s a chance that this is one of the reasons the negotiations with Microsoft came to no conclusion.
Then, TikTok could very well seek a potential deal with another American company, and many believe that Oracle is now in pole position to buy the Chinese service. Oracle has long been interested in TikTok, and now that the takeover talks with Microsoft failed, the company can continue the negotiations with parent company ByteDance.
Aurojyoti Bose, Lead Analyst at GlobalData, a leading data and analytics company, says Oracle would most likely continue the talks with TikTok.
“ByteDance, which is valued at about US$100bn in private markets, is having a tough time with forced sale of TikTok’s operations looming over in the US. With Microsoft out of the race, the likelihood of Oracle acquiring TikTok’s US operations looks bright. However, the Chinese Commerce Ministry recently amended its export control rules to restrict the sale of several technologies to foreign players, which is likely to complicate and delay the TikTok sale further. The amended rule calls for government approvals for export of certain technologies,” the said.
And last but not least, ByteDance could very well try to avoid the U.S. ban on its own by simply complying with all requirements of the Trump administration.
What this means is that the data of American TikTok users would be stored in the United States, but if this happens, the Chinese company would need a tech partner that would handle the data. Again, Oracle is the chosen one, as it’s seen as a “trusted partner,” with President Trump to give his blessing to the partnership later this week.
“It is believed that ByteDance is trying other options as well to address the US data security concerns and avert the ban while also obeying the new export rules. One option could be entering into partnership with any American firm, which will also be responsible for managing TikTok’s US user data,” the analyst said.
Needless to say, ByteDance has remained completely tight-lipped on everything for now, most likely as the company considers its options. It remains to be seen which way the Chinese decide to go, but a decision should be made as soon as possible, especially because a ban in the U.S. is now looking.