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Is Trump banning TikTok? Microsoft planning to buy TikTok

Is Trump banning TikTok? Microsoft planning to buy TikTok

Trump banning TikTok!! is the hot topic amongst people especially teens and they are worried about it.

US president Donald Trump on Friday said that he would sign an Executive order which will ban TikTok from US. 

The reason for banning popular music video app is because of the national security concerns over the safety of personal data handled by TikTok. This ban will be a major setback for ByteDance, owner of TikTok. ByteDance is one of the very few companies from China that became global success which has been mainly due to its entertainment application TikTok.

The Negotiations

trump banning tiktok
Microsoft considers acquisition amidst trump banning tiktok

After the announcement made by President Trump, there were desperate negotiations with White House, in these negotiations potential buyers of TikTok were also involved and one of the potential buyers is Microsoft. 

But, in Friday’s negotiations the Chinese company was not able to strike any deal which would have safeguarded TikTok’s functioning in US market. It is expected that talks will continue in the coming days.

Microsoft can acquire TikTok with little obstacles as the entertainment app was hardly any competition for the company as compared to companies like Facebook. Facebook is a direct competitor to TikTok and US lawmaker these days are strict about maintaining fair competition in the market and it frowns upon underhanded practices like taking over other businesses.

The expectations of ByteDance are high and it has placed rich acquisition value of $50 billion. With such rich valuation ByteDance also demands to hold minority share in the entertainment app. These demands have complicated the deals between prospective buyers and the company.

To the reports which talked about acquisition of TikTok, Trump said: “Not the deal that you have been hearing about, that they are going to buy and sell… and Microsoft and another one. We are not an M&A (mergers and acquisitions) country”

US Treasury Department, which is looking at the ByteDance’s ownership over TikTok, refrained from commenting on these matters.

What is government up-to?

trump banning tiktok
Is Trump banning TikTok

Till now it is not clear about the authority of President to ban the popular Chinese app in US. It is also yet to know how ban will be enforced and what legal implications would arise.

Relations between US and China have not been good for quite some time with trade war from both ends, political problems in Hong Kong, cyber-attacks from china and spreading novel coronavirus. Now TikTok has come-up under radar amidst economic war between two countries. 

Recently US Senate over the concerns of information security passed a bill that would bar US federal employees from using TikTok on government issued devices. This bill will be raised for the vote from complete Senate and the House of Representatives has already voted for measures similar to it.

Kevin Mayer, CEO at TikTok said that the company has been adhering to US laws and has been allowing inspection of their policies and data handling. The app company has also allowed the examination of codes which run the app.

Amidst pressure from US government, TikTok has introduced features on its application which allows users to add special effects to their short videos and it has already become a hit amongst teenagers.

TikTok’s owner ByteDance has received offer from few of its investors, including General Atlantic and Sequoia where majority of the shares will be transferred to investors. The proposal is valued at $50 billion but, few members in ByteDance believe that the app is worth more than that.

ByteDance has shielded TikTok at multiple instances from potential acquisitions by companies and investment firms.

Background of TikTok and unapproved acquisition

trump banning tiktok
TikTok was

TikTok came into existence after ByteDance acquired video entertainment app at the value of $1 billion in 2017. After acquiring, it was relaunched as TikTok. But, during acquisition ByteDance did not take approval from CFIUS. CFIUS is an agency which is responsible for reviewing deals and sniffing out any potential security risks. 

Since, ByteDance did not take approval from CFIUS, last year it launched an investigation at the company and entertainment app TikTok.

For past some time, US has become stricter at scrutinizing app developers over the way these developers handle the personal data. If there is involvement of US military or any intelligence personnel then it is taken more seriously. 

A bit about ByteDance

trump banning tiktok

ByteDance is worth over $140 billion and it has multiple investors including Japan’s SoftBank Group Corp.

ByteDance’s revenue mostly comes from advertisements which are run over their multiple apps like Douyin (Chinese version of TikTok), Jinri Toutiao (News aggregator app), Xigua (Video-streaming app) and Pipixia (app for jokes and funny videos)

Company’s other foreign applications are Lark-a work collaboration tool and Resso-a music streaming app.

What do you think, will Trump ban the Chinese app TikTok? Share your thoughts in comments.

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