Updated: Oct 9
In this episode, we are explaining the race to buy the app TikTok. The US President originally tried to ban the Chinese owned social media company Tik Tok because of National Security concerns. He has opened the option for American companies to purchase the company. There are concerns about the precedent this may set for global companies in the future and if the government should be brokering these kinds of business mergers.
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The information in this episode comes from Microsoft, Buzzfeed, The New York Times, and CNN Business.
What’s been happening to Tik Tok since Episode 5?
Since we last discussed Tik Tok, President Trump delivered an Executive order to ban Tik Tok because of National Security concerns. Now he has given American companies a deadline of September 15th, 2020 to purchase the company from ByteDance. ByteDance is the Chinese owned company that currently owns Tik Tok.
What companies are interested in purchasing Tik Tok?
There are a few companies that are interested, however, Microsoft was the first company that was considered to purchase the entire entity. In fact, in an interview with the Associated Press on August 3rd, President Trump said, “I don’t mind if it’s Microsoft or anybody else, a big company, a secure company, a very American company buys it.
Microsoft has stated on their official corporate blog that they are attempting to move quickly and, “During this process, Microsoft looks forward to continuing dialogue with the United States Government, including with the President.”
What other companies may think of this merger?
Other companies, such as Facebook, have been worried about the precedent the banning of Tik Tok may set. Even though Mark Zuckerberg agrees that there are legitimate National Security concerns, he is worried about the outcome. According to an interview with Buzz Feed, “I just think it’s a really bad long-term precedent, and that it needs to be handled with the utmost care and gravity whatever the solution is,” Zuckerberg said. “I am really worried…it could very well have long-term consequences in other countries around the world.”
The worries about this merger are bothersome to a lot of people, especially since it’s the US Government that is brokering the deal.
Absolutely, it’s been implied that the United States Government should get a portion of the sale. According to an article from CNN, President Trump stated, “Whether it's Microsoft or somebody else, or if it's the Chinese — what the price is, the United States could — should get a very large percentage of that price. Because we're making it possible.”
In the same article, the President had this to say, "TikTok is a tremendous success, but a big portion of it's in this country.” The President is saying that 100 million United States users of Tik Tok are responsible for the popularity of the app, so our country should reap the benefits of the sale to a US company.
This kind of deal is very unheard of. The President's requirement that some of the money from the deal goes to the US Treasury doesn't have a basis in antitrust law, according to Gene Kimmelman, a former chief counsel for the US Department of Justice's Antitrust Division and currently a senior adviser to the policy group Public Knowledge.
Kimmelman admits that this deal is odd, "This is quite unusual, this is out of the norm. It's actually quite hard to understand what the president is actually talking about here. ... It's not unheard of for transactions to have broader geopolitical implications between countries, but it's quite remarkable to think about some kind of money being on the table in connection with a transaction."
It’ll be interesting to see how this boils down, and who ends up owning Tik Tok in September. It will also be interesting to see how the United States Government stays involved in the sale.