Aug 03, 2020 15:48 UTC
  • Microsoft talks to buy TikTok's US operations spark ire in China

A potential shotgun wedding to Microsoft Corp (MSFT.O) for TikTok’s US operations provoked an outcry on Monday on Chinese social media as well as criticism from a prominent Chinese investor in TikTok owner ByteDance.

The US tech giant formally declared its interest on Sunday after President Donald Trump, who has cited national security risks posed by the Chinese-owned short video app, reversed course on a planned ban and gave the two firms 45 days to come to a deal.

The proposed acquisition of parts of TikTok, which boasts 100 million US users, would offer Microsoft a rare opportunity to become a major competitor to social media giants such as Facebook Inc (FB.O) and Snap Inc (SNAP.N).

Shares in Microsoft, which owns the business social media network LinkedIn and is also seeking to buy TikTok’s Canadian, Australian and New Zealand interests, rose nearly 3% in early trades on Monday.

Clinching a deal that will satisfy all parties and potentially act as a lightning rod for US-China relations will be a tall order.

People close to the situation have told Reuters that all of TikTok could be worth $50 billion, but the forced sale of the US division and some other units alone will likely yield much less than that.

“A forced deal under Washington’s shotgun could open up for endless litigations if it should result (in) an unfavorable outcome to existing private shareholders,” said Fred Hu, Chairman of Primavera Capital Group, an investor in ByteDance and one of China’s best known private equity groups.

Hu said Microsoft was a credible buyer but questioned how selling large parts of TikTok’s operations at such an early stage of its growth could ever be a good deal for ByteDance.

“It absolutely makes no sense. Bytedance is an innocent victim of the mad politics and mad geopolitics. It is a sad outcome for Bytedance, for entrepreneurial capitalism, and for the future of global commerce,” he said.

ME

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