Microsoft to continue discussions on potential TikTok purchase in the US

Microsoft to continue discussions on potential TikTok purchase in the US(blogs.microsoft.com)

96 points by wlrd 5 years ago | 62 comments

Shank 5 years ago |

> The discussions with ByteDance will build upon a notification made by Microsoft and ByteDance to the Committee on Foreign Investment in the United States (CFIUS).

For me, this was the first time I've actually had to do a lot of thinking about CFIUS and its implications. I definitely didn't understand the scale and impact of CFIUS before, but now I'm at least aware of the power. I'm undecided as to whether or not this is an appropriate power for the president to have, but I think I'm much more relieved to understand the mechanism by which the "TikTok ban" is being implemented than the very nebulous term "ban."

The reality is that this is the type of thing that can affect each and every one of us in a new set of unexpected ways. Lawfare's explanation was particularly shocking to me:

> TikTok (then called “music.ly”) was bought by ByteDance in 2018 for nearly $1 billion. Of course, music.ly like ByteDance was a Chinese company. So you might think that CFIUS would have no say over that acquisition. But you’d be wrong. For purposes of CFIUS review, a covered “U.S. business” is any entity that engages in interstate commerce in the United States—even if that entity is a foreign corporation. [0]

In other words, I'm at least thankful that I now know that the US has a legal framework for this set of actions -- even if they're a bit shocking in the first place.

[0]: https://www.lawfareblog.com/tiktok-and-law-primer-case-you-n...

andrewem 5 years ago | |

See also the case of Grindr and CFIUS, for instance https://www.washingtonpost.com/politics/2019/04/03/why-is-us...

rswail 5 years ago | |

CFIUS was also the committee that was dragged into the "scandal" concerning Uranium One (a Canadian company) and the supposed involvement of Hillary Rodham-Clinton beaten up by Fox News et al.

mike00632 5 years ago | |

Yes, the CFIUS needs to be reexamined because its use in this case seems objectively capricious. It boggles my mind that all of this can be done with no evidence presented of wrongdoing. I understand that some aspects of cyber-security in the government are classified but there should at least be an effort to explain precisely what types of data TikTok is suspected of collecting. Instead we have Mike Pompeo giving glib answers to questions, saying that TikTok sends "personal information" to the Chinese Communist Party (operative word being "communist" I guess).

Another reason the executive branch should give detailed reasoning for their decision is to avoid the appearance of impropriety. Right now it seems like Trump is simply mad at TikTok because some users allegedly reserved tickets to his Tulsa rally in order to spoil turn out (it should be mentioned that this also was reported by the media without hard evidence).

someperson 5 years ago | | |

I think the reasoning of the US government is that every private company in China is an arm of the state since everybody in China is required by law to help China's intelligence service via article 7 of China's National Intelligence Law (and any company with more than 50 people including Douyin/TikTok is required to have a Chinese Community Party secretary so even more state influence)

And because the government of China's long track record of data theft for commercial gain the Trump administration sees it best to use CIFIUS to ban all companies from China that collect any sensitive information (whether personal or corporate), even if they haven't found a smoking gun that the government of China has misused the data yet.

I don't believe the Trump administration is going for complete economic decoupling with China at this stage (though I personally wish they were), but they certainly are going for banning applications with any access to sensitive information at all. Through this reasoning I am fully expecting applications such as AirDroid (made by Beijing-based Sand Studio) to be banned sooner rather than later.

exanimo_sai 5 years ago |

The takeaways from this potential acquisition for me: - The splinternet is real - as a foreign business with US interests be aware which side of the splinternet you are positioned. (Stratechery wrote a good piece of the four way split of the internet between US, China, India and EU https://stratechery.com/2020/india-jio-and-the-four-internet...) - While this may appear as a weird adjacency for Microsoft to go into they have successfully run Xbox a consumer business for many years - The consumption ecosystem from user data and behaviour from TikTok acquisition can only bolster Microsoft - Social capital is a lucrative currency for any tech company especially one such as MS who has a lot of catching up to do to other Big Tech -

throwmeaway2344 5 years ago | |

MSFT will do whatever it takes to keep that JEDI contract

JacKTrocinskI 5 years ago | | |

How does this relate to the JEDI contract?

ocdtrekkie 5 years ago |

Seeing a company post an official blog post about having discussions about an acquisition seems super weird to me. But I suppose once the President is ranting about it on Twitter, it's hard to follow the usual processes.

qppo 5 years ago |

On the one hand, this is probably a good move made for the wrong reasons.

On the other, I feel like if we're going to force a divestment in the name of national security for a social media app, maybe we should have all our social media apps operating domestically abide by strong privacy protections and data isolation policies.

pm90 5 years ago | |

You may want to read up a bit on how lobbying works.

US based companies enjoy 2 benefits when it comes to regulation: 1) “Domestic” factor which makes them immediately above suspicion of wrongdoing by the National Security apparatus and 2) Access to the legal lobbying infrastructure which they use to protect their interests.

The interests of both Domestic firms (who want to neutralize a fast growing threat) and the National Security apparatus align in this case, which is why the parent company seems to have accepted the fact that it would need to sell off its interests in TikTok. Their interests do not align so much when it comes to protecting user data (arguably for certain 3 letter agencies, they align in favor of fewer user privacy measures).

For those that wonder why big technology firms all seem to be based in the US, there isn’t something magical about the US. It is mostly the State assisting domestic firms in neutralizing international competitors.

qppo 5 years ago | | |

Not really sure why you need to be condescending, because what you're talking about isn't how lobbying "works" nor is it how business works in the United States.

>“Domestic” factor which makes them immediately above suspicion of wrongdoing by the National Security apparatus

This for example, is not true.

NiceWayToDoIT 5 years ago |

Is it just me or Microsoft has a track record of ruining products they acquired? Skype, Nokia, Minecraft, Wunderlist...

And I am afraid about fate of the GitHub ...

There is a huge list here: https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitio...

how many of those survived?

britmob 5 years ago | |

I wouldn’t say Minecraft has been ruined. Sure, it’s not been taken in a direction a lot wanted, but it’s more popular than ever now..

pjmlp 5 years ago | |

Nokia is doing quite well, not only did they use to money to buy back the Siemens part on the Networks business, they now own Bell Labs.

Also despite being only Nokia branded, their Android phones are just as good as ever, and the only Android brand that I actually get updates on, versus the one shot update in a device's lifetime that I have had from other OEMs.

detaro 5 years ago | | |

The Nokia that is doing well now is not the part that got bought by Microsoft though?

boring_twenties 5 years ago | | |

My G6 just got an update 2 or 3 days ago... which bumped my Android security patch level to April 2020, lol.

ffggvv 5 years ago | |

most of those are pre satya. i think his biggest acquisition has been linkedin. which has mostly been left alone. and github

lewisj489 5 years ago | |

> Minecraft

Absolutely not ruined

xnx 5 years ago |

Seems like a huge win for Microsoft to be able to buy the hottest social media service at a fire sale price. Will other bidders be allowed?

partiallypro 5 years ago | |

Other companies are also in talks, but Microsoft is the furthest along/having the best chance.

TMWNN 5 years ago | | |

More to the point, Microsoft is the company least involved in social media that has the largest warchest. No way Congress or the administration would condone any of the companies whose CEOs testified on Capitol Hill this week buying TikTok.

techntoke 5 years ago | | |

Almost every kid at my daughter's elementary school has TikTok installed and they are all under 13. If you have an Android phone, they do basically no verification to register and then if you go to your Google Account you can see that they share your email and personal data with TikTok. This is a major COPPA violation. Does this mean Microsoft may soon be the biggest violator of COPPA in the US?

dave_aiello 5 years ago |

There is some really good history of the Committee on Foreign Investment in the United States (CFIUS) found in this Foster Garvey Cross-Border Business Law Blog post from 2018, https://www.foster.com/cross-border-business-law-blog/cfius-....

throw554364 5 years ago |

> The two companies have provided notice of their intent to explore a preliminary proposal that would involve a purchase of the TikTok service in the United States, Canada, Australia, and New Zealand and would result in Microsoft owning and operating TikTok in these markets. Microsoft may invite other American investors to participate on a minority basis in this purchase.

If the deal passes, Microsoft will get TikTok in four of the Five Eyes countries. I wonder why the UK service is not included?

This also means there will be a TikTok US, TikTok Global, and Douyin.

Perhaps the next phase for ByteDance will be completely separate TikToks where they license the technology to local companies. Then these local companies can sign content deals with other countries if they want to share.

someperson 5 years ago |

Why didn't Microsoft buy Vine when Twitter was struggling a few years ago?

giancarlostoro 5 years ago | |

Vine was married to Twitter for login / registration. It made the most sense for Twitter to buy it. Microsoft's hitting a momentum of growth currently, which might be a good time for them to make some acquisitions, they've also started booting back up some of their game studios as well.

someperson 5 years ago | | |

Grandfathering existing user's Twitter login then having all new users use a new login system would not have been hard.

xttblog 5 years ago |

I'm worried about the business environment in the United States. At least some evidence should be found or produced to show that tiktok should be banned!

casefields 5 years ago | |

Burning sources and methods to placate the public is usually a waste. That's why we elect representatives at different levels.

badwolf 5 years ago |

I think the odd thing for me, is this just after Microsoft abruptly shut down Mixer.

ddlutz 5 years ago | |

Why is this odd? They seem like very different products to me.

ffggvv 5 years ago |

does anyone know if all the music on tiktok is properly following copyright law etc? and will microsoft be in the hook for removing all this content with dmca?

bestnameever 5 years ago | |

I imagine many of it is either paid to be on there or intentionally placed on there. It's great for visibility and PR.

bigpumpkin 5 years ago |

“MY STYLE of deal-making is quite simple and straightforward. I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after.”

“I've read hundreds of books about China over the decades. I know the Chinese. I've made a lot of money with the Chinese. I understand the Chinese mind.”

― Donald Trump, Trump: The Art of the Deal [1]

[1]https://www.amazon.com/Trump-Art-Deal-Donald-J/dp/0399594493