TikTok officially chooses bidder

market opening with apple stock split rect

UPDATE- 4:00AM PT on September 2nd

The Wall Street Journal reports that talks over the purchase of TikTok have stalled amid confusion over what would happen to the app’s algorithm, it’s secret sauce. From the report:

Deal talks for TikTok’s U.S. operations have hit a snag over the question of whether the app’s core algorithms can be included as part of a deal, according to people familiar with the matter.

The algorithms, which determine the videos served to users and are seen as TikTok’s secret sauce, were considered part of the deal negotiations up until Friday, when the Chinese government issued new restrictions on the export of artificial-intelligence technology, according to people familiar with the matter.

Now both sides are trying to figure out whether the order means the algorithms need Chinese government approval for transfer, and if so, whether Beijing would sign off. The complexity involved has reduced the chances that a deal could be completed soon.

UPDATE- 6:00AM PT on August 31st

CNBC reports that TikTok has chosen who will buy the app’s operations in the US, New Zealand, and Australia with an official announcement coming as soon as tomorrow.

TikTok has chosen a bidder for its U.S., New Zealand and Australian businesses, and it could announce the deal as soon as Tuesday, according to people familiar with the situation.

CNCB

Microsoft in partnership with Walmart are the top contenders according to CNBC, with the price range of TikTok in the US ranging between $20-$30 billion.

UPDATE- 6:00 AM PT on August 30th

The Wall Street Journal reports that on Friday China announced new tight restrictions on tech exports that coudl threaten the sale of TikTok in the United States, per the report:

China announced new restrictions on artificial-intelligence technology exports that could further complicate the sale of TikTok’s U.S. operations, while intensifying the tech battle between the world’s two largest economies.

The new restrictions, unveiled Friday by China’s ministries in charge of commerce and science and technology, cover such computing and data-processing technologies as text analysis, content recommendation, speech modeling and voice-recognition.

UPDATE- 7:00 AM PT on August 27th

CNBC is reporting that a deal between Microsoft and TikTok could take place in the next 48 hours, just one day after TikTok’s CEO Kevin Mayer resigned.

UPDATE- 1:00 PM PT on August 25th

The Wall Street Journal reports that representatives of TikTok approached Netflix to “gauge its interest” in a potential deal to purchase the apps US operations. According to people familiar with the matter quoted by the Journal, Netlfix passed on a deal.

If Netflix were to have shown interest, it would join Microsoft and Oracle in the leading pack to buy the app before President Trump’s imposed September 15th deadline. President Trump says that if an American company is not able to buy the operations of the app in the US by the 15th, it will be banned.

UPDATE- 1:30 PM PT on August 21st

Bloomberg reports that Google considered buying a small stake in TikTok through one of its investment arms apart of a group bid, per the report:

Google parent Alphabet Inc. considered participating in a group bid for TikTok, but the effort fizzled in recent days, according to people familiar with the matter.

Several firms discussed forming a consortium to invest in the popular video-sharing app, with Alphabet weighing a minority, non-voting stake through one of its investment arms, said one of the people.

Alphabet didn’t lead the initiative. It isn’t clear which U.S. company did, or why the effort ended. Alphabet has not ruled out participating in future bids, said the person, who asked not to be identified discussing a private matter.

The news comes 25 days away from President Trump’s September 15th deadline for a US company to purchase the app, or else a ban is in place, Reports suggest that Microsoft is in the lead, however recent interest by Oracle could be hampering Microsoft’s chances.

UPDATE- 8:40 AM PT on August 21st

Bloomberg reports that the White House is still unsure on whether it will require Apple and Google to remove WeChat from their respective app distribution platforms outside the United States.

The administration is however signaling to US companies in China that they will be allowed to use WeChat given its vital importance in day to day life in the country.

UPDATE- 11:00 AM PT on August 14th

During his normal press conference, President Trump was confronted by Bloomberg’s White House correspondent Justin Sink over what he views are on the impacts that a WeChat ban would have on Apple’s business in China, Pres. Trump’s response was “whatever.” Watch the exchange below.

UPDATE- 4:00 AM PT on August 12th

Reuters has obtained White House documents that were sent to Trump supporters last week that provides more depth and clarity on the executive order signed. Per the documents, Apple and Google may have to remove TikTok from their respective app stores if a ban is in place, the report states:

“Prohibited transactions may include, for example, agreements to make the TikTok app available on app stores … purchasing advertising on TikTok, and accepting terms of service to download the TikTok app onto a user device,” the document states. 

A source familiar with the White House document verified its authenticity. TikTok did not immediately respond to a request for comment. 

Some technology industry experts said eliminating TikTok’s ability to be offered on Apple Inc (AAPL.O) and Google owner Alphabet Inc’s (GOOGL.O) app stores, which in turn allow it to be downloaded on iPhone and Android smartphones, could cripple the app’s growth. 

Apple and Alphabet (Google) did not provide a comment, however, both would be required to comply with the order as they have in other countries such as India.

UPDATE- 11:00 AM PT on August 11th

As the threat of a TikTok ban in the US continues to settle in, the true impacts it would have on Apple are also emerging. Apple analysts Ming Chi-Kuo is warning of a 25-30% drop in iPhone shipments if Apple is forced to remove TikTok from the App Store.

While Apple’s relation to President Trump’s executive order remains unknown, specifically how far it would have to cooperate, analysts are still weighing the cost. As CNBC reports, Wall Street analysts are warning that China could use major US tech-companies like Apple and Microsft as a tool to retaliate against a ban.

“We caution that the Chinese government has historically exercised wide discretion in pressuring foreign companies, particularly in periods of geopolitical tension,” AB Bernstein analyst Toni Sacconaghi told clients. 

CNBC

China has threatened action against Apple in the past, pushing the nearly $2 trillion company into a corner where it must balance being an American company, with heavy economic and social reliance in China.

UPDATE- 8:00AM PT on August 10th

Reuters reports that a full deal between Microsoft and TikTok at the levels that President Trump is hoping for could take years to pursue, per the report.

TikTok is functionally and technically similar to ByteDance-owned Douyin, which is available only in China, and shares technical resources with it and other ByteDance-owned properties, people familiar with the matter said.

While the code for the app, which determines the look and feel of TikTok, has been separated from Douyin, the server code is still partially shared across other ByteDance products, the source said. The server code provides basic functionality of the apps such as data storage, algorithms for moderating and recommending content and the management of user profiles.

If Microsoft would want to transfer the code and servers from one database to another, it would have to interrupt TikTok’s services. If not, Microsoft would need to use ByteDance’s code for the app while it works on its own code.

UPDATE- 4:00PM PT on August 8th

The Wall Street Journal reports that Twitter has held “preliminary” talks with TikTok about a possible purchase of the video-sharing apps US operations.

The scope of the talks remains unknown, however, Microsoft is still seen as a front-runner in the countdown to buy the app. As the Journal notes Twitter would require financial assistance in order to complete a deal. Twitter still sees itself having an upper hand in negotiations as it’s considered a smaller company compared to Microsoft and hence would face less anti-trust accusations according to people familiar with on-going talks.

UPDATE- 12:00PM PT on August 8th

NPR reports TikTok will sue the President Trump administration over an executive order banning any transaction with its owner, ByteDance with any American resident or business.

NPR has learned that the lawsuit will argue that President Trump’s far-reaching action is unconstitutional because it failed to give the company a chance to respond. It also alleges that the administration’s national security justification for the order is baseless, according to the source.

According to a court filing seen by NPR, TikTok will argue that the executive order is “unconstitutional” because it did not provide the company time to accordingly respond. It will add that the administration citing “national security concerns” is baseless and unjustified.

The order could come as soon as Tuesday, August 11th. The White House declined to comment, instead repeated its past position on the app.

“The Administration is committed to protecting the American people from all cyber related threats to critical infrastructure, public health and safety, and our economic and national security,”

White House spokesman Judd Deere to NPR

UPDATE 9:10AM PT on August 7th

As the looming threat of a WeChat ban from the App Store due to an executive order by President Trump raises questions, a brand new poll shows the staggering impact it would have on Apple.

A new poll conducted on Chinese social media platform Weibo by a state-run media group, reported by CNBC’s Eunice Yoon asks Chinese users in the case that WeChat does get banned, would they buy a new phone or simply delete the app.

A staggering at least 660,000 people said they would buy another phone and at least 38,000 people say they will delete the app entirely. WeChat is an essential app in China, from banking to day to day services, without it, a device is practically useless.

Under the current understanding of the executive order by President Trump, if Apple (an American business) kept WeChat, owned by Tencent on the App Store in any country it could be considered a “transaction” which the executive order bans American businesses from doing with Tencent & ByteDance.

The White House and executive order are vague in what it considers a “transaction,” and it remains unknown if an agreement between Apple and ByteDance/Tencent would be classified as one. If so, Apple would be forced to remove WeChat and TikTok from the App Store internationally unless in TikTok’s case, it’s able to divest ownership away from ByteDance.

UPDATE 6:30 PM PT on August 6th

President Trump has signed an executive order banning any American company or resident from doing business with TikTok or ByteDance, TikTok’s owner, or Tencent, the owner’s of messaging app WeChat starting in 45 days.

After the 45 days, any American or company still doing business with ByteDance and/or Tencent may be subject to sanctions as per the United States State Department. The order in direct terms gives any possible buyers of TikTok, currently only Microsoft strictly 45 days to complete a deal.

However, the order is vague on what it considers a “transaction,” as pointed out by Axios’s Dan Primark, Tencent does business with a number of companies such as Reddit, and Epic Games, the makers behind Fortnite. Whether they’ll receive an exception or not is up for clarity from the White House at this point in time.

Facebook CEO Mark Zuckerberg who has stayed quiet during the whole “TikTok ban ordeal” said in an internal meeting on Thursday with employees via BuzzFeed that banning the app would “set a really bad long-term precedent”. Zuckerberg goes on to say he is “really worried,” and that a ban could impact other countries and not only the United States.

UPDATE 6:00 AM PT on August 4th

The saga around TikTok continues to grow in complexity and political tension. For the first time today, China has stepped into the discussion. What’s important to note is that at the core of the whole “TikTok Ban” situation is the app’s alleged ties to China’s intelligence efforts.

Today China Daily Newspaper, an indirect mouthpiece for the Chinese regime as reported by Reuters, published a scathing editorial saying that the United States is “bullying” Chinese tech companies as a result of President Trump’s extreme implementation of his “America first” policy.

The editorial goes on to say that there are “plenty of ways to respond if the administration carries out its planned smash and grab.”

UPDATE- 2:00 AM PT on August 3rd

The Sun is reporting that TikTok’s owner, ByteDance will move its headquarters from Bejing to London in a bid way to further itself from the Chinese government.

According to the paper, British ministers approved an investment plan regarding ByteDance earlier this week with President Trump reportedly supporting it. No official announcement has been made, but could be revealed “next week”. The hope is that a move of ByteDance, the company which owns and operates TikTok to London will ease concerns of ties to the Chinese government.

UPDATE- 4:00 PM PT on August 2nd

Microsoft has confirmed in a press release that it is in talks to purchase TikTok’s operations in the United States, Canada, Australia, and New Zealand. Microsoft says that CEO Satya Nadella spoke to President Trump about the matter, per the press release:

Microsoft fully appreciates the importance of addressing the President’s concerns. It is committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.

Microsoft says it is “moving quickly” to confirm and finalize a deal with ByteDance, TikTok’s owner no later than September 15th. The company also says that the Committee on Foreign Investment has been informed of active discussion on a purchase.

Microsoft will move quickly to pursue discussions with TikTok’s parent company, ByteDance, in a matter of weeks, and in any event completing these discussions no later than September 15, 2020. During this process, Microsoft looks forward to continuing dialogue with the United States Government, including with the President.

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). 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 a purchase goes through, which seems likely, Microsoft says it will ensure that all data from US users will be stored and remains in the United States, and says that data outside the US will be “deleted from servers outside the country after it is transferred.” Microsoft says that it will not provide updates on discussions until a final “definitive outcome” is made.

UPDATE- 8:00 AM PT on August 2nd

US Secretary of State Mike Pompeo said on Sunday in an interview with Fox News that President Trump will act on TikTok, and other Chinese owned software companies and apps in “the coming days’.

“President Trump has said ‘enough’ and we’re going to fix it and so he will take action in the coming days with respect to a broad array of national security risks that are presented by software connected to the Chinese Communist Party,”

US Secretary of State Mike Pompeo via Reuters

The Secretary also hinted at wider bans with apps beyond TikTok such as WeChat due to their ties to the Chinese government.

“These Chinese software companies doing business in the United States, whether it’s TikTok or WeChat — there are countless more … are feeding data directly to the Chinese Communist Party, their national security apparatus,”

The Verge reported on Thursday that an executive order enforcing a ban could come as soon as Saturday, however, it seems complications with a potential deal with Microsoft caused disruptions.

UPDATE- 1:00 PM PT on August 1st

The Wall Street Journal is reporting that Microsoft has paused previously ongoing negotiations to purchase TikTok’s US operations. The decision according to people who are familiar with the matter say that it came after President Trump said he wouldn’t support a deal. According to the Journal, negotiations arent completely dead, however, both Microsoft and ByteDance are “trying to get clarity on {the} White House{’s} stance.”

If a deal, made and approved, it could be a reason not to ban the app. Current concerns revolve around TikTok being fully operated by ByteDance, a Chinese owned company. If Microsoft is able to finalize a deal, it would leave little, if no concern over the app spying on users for the Chinese government.


As COVID19 raves and spreads its ugly face from state to state, President Trump and his administration is declaring war on an app.

On Friday aboard Air Force One President Trump told reporters that he’ll ban TikTok, a currently owned Chinese app that has come under increased scrutiny for spying on users. A ban, according to the President who often overly exaggerates reality is one of many options he has for TikTok, of course, he did not specify what other options are.

Initial concerns arose when US Attorney General William Barr and Secretary of Defense Mark Esper in February said that Chinese owned apps are “Trojan horses for Chinese intelligence.” Earlier this month US Secretary of State Mike Pompeo said TikTok is a national security concern, and that the US could ban it.

Following the statement from the President on Air Force One, it was confirmed that Microsoft is in talks to purchase the apps US operations, with its original owner ByteDance reportedly agreeing. Despite the timing, sources say that a potential purchase has been in talks for a while, not new based on the comments by the President. No official statement has been made by TikTok, Microsoft, or ByteDance. However, even if US operations are diverted to the US, President Trump says he does not support a possible deal.

Moving US operations to the US and/or a US company would help alleviate concerns of the app using data from users to aid the Chinese regime in its intelligence efforts. In response to the potential ban, TikTok is on a major PR and internal communication effort to clear up its name.

A spokesperson for the app told CNBC that it remains committed to furthering its economic and social contributions in the United States, and touts its recently announced $1 billion creators fund.

“We’ve hired nearly 1,000 people to our US team this year alone, and are proud to be hiring another 10,000 employees into great paying jobs across the US.,” the spokesperson said in a statement. “Our $1 billion creator fund supports US creators who are building livelihoods from our platform.

“TikTok US user data is stored in the US, with strict controls on employee access,” the statement said. “TikTok’s biggest investors come from the US. We are committed to protecting our users’ privacy and safety as we continue working to bring joy to families and meaningful careers to those who create on our platform.”

TikTok Spokesperson to CNBC

TikTok’s U.S. General Manager Vanessa Pappas released a video on Twitter, via the official TikTok account saying that the app isn’t going anywhere and that she’s proud of the 1,500 US employees it currently has, with plans to expand.

TikTok whos users base is largely 18-34 years old, a key voting group, have taken to the app to state their disapproval of a ban and say overly emotional goodbyes to their followers. However, as the 2020 Presidential Election is now less than 100 days away, the large million+ voting group could head to the polls and hurt the President’s re-election efforts.

Additionally, this comes as the United States recently crossed the 2 million mark for confirmed COVID19 cases and a heart-stopping more than 130,000 deaths according to data from John Hopkins University. A potential ban is nothing short of diverting media attention away from the outbreak, which has thankfully failed.

The Verge is reporting that a ban of the app could come as early as Saturday via executive order, however, no White House official has confirmed a Saturday ban.

For the latest on this developing story, follow us on Twitter @AppleTerminal.

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Sami
Sami started falling in love with Apple in 2010 with the iPhone 4S. As a registered developer, he deeply admires the world of Apple. Sami is an aspiring journalist, writer, and actor. He also has devoted his life to sharing his passion and knowledge with others around the world.