Updated: Sep 24, 2020
Microsoft has teamed up with supermarket chain Walmart for its bid to buy TikTok's American business, while the video-sharing app's current owner, China-based Bytedance, has reportedly begun preparations for a temporary shutdown in the United States.
Bytedance is still in talks with various other parties about selling the TikTok business in the US and other markets like; Canada, Australia and New Zealand. Next to going on the PR and legal offensive over President Donal Trump's plans to ban the app.
Trump's plan to ban the app would likely be called of if TikTok was owned by an American Company. Although the US government would still need to approve the deal with any new owner for that to be assured.
It's thought that Walmart was originally part of a group of possible bidders rallied by Japan's Softbank, but switched sides to ally with Microsoft to acquire the business. Microsof has been a favourite to acquire for some time now, but rival tech company Oracle has also put together a consortium to bid for TikTok's American operations.
Trumps has said that American will be banned from transacting with TikTok from 15 September., and ordered Bytedance to offload all its US assets by 12 November. The ban is seen as part of Trump's "I'm though on China'' election schtick, and is officially motivated by the presidents concerns that the Chinese government has acces to TikTok's global audience and user-data.
Bytedance has denied all the allegations being made against it regarding China's access to its global audience and data, and te firm's lawyers will tell US judges that Trump’s executive orders instigating the ban and ordering the asset sale are illegal and unconstitutional.
Either way, Trump's government is going to want a prominent American company leading the consortium that buys the app's US business, hence Walmart was a good partner for Softbank. It's though though, that the President's team reckons that a tech firm fronting the bid would more in line with the "it’s because we’re concerned about the data, honest" narrative, that is why Walmart would be better off with Microsoft.
The supermarket firm says it reckons an interest in TikTok would help it;
“reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses”.
“We are confident that a Walmart and Microsoft partnership would meet both the expectations of US TikTok users while satisfying the concerns of US government regulators”.
The sale of the US TikTok business seems certain. The sudden departure this week of the app’s new American boss Kevin Mayer – mainly because his global CEO role is looking less global – pretty much confirms the imminent sale. Sources say Bytedance could pick their preferred bidder later today.
It’s not clear what that means for Trump’s 15 Sep ban when sales talks get ramped up a gear after they picked a preferred bidder. If the sales is completed before 12 November, will TikTok be allowed to continue its operations Stateside in the meantime?
Due to the uncertainty, TikTok has already implemented a hiring freeze for most open positions, bringing in only 5% of the staff it planned to recruit. Bytedance has also apparently instructed its engineers to make plans for a temporary shutdown of the TikTok app in the US, and is also making separate plans for TikTok U.S. employees and vendors to be compensated in the event of a shutdown.
According to Reuters, the company also has plans in place for compensating TikTok’s American employees, suppliers and partners if the ongoing political challenges result in any downtime. Though, sources say, those plans are very much a contingency that Bytedance bosses still hope won’t need to be put into effect.
A TikTok spokesman said in a statement;
“As any responsible company would do, we are simultaneously developing plans to try to ensure that our U.S. employees continue to get paid in any outcome.”
A spokesperson for TikTok told Reuters:
“We are confident that we will reach a resolution that ensures TikTok is here for the long run for the millions of Americans who come to the platform for entertainment, self-expression, and connection. As any responsible company would do, we are simultaneously developing plans to try to ensure that our US employees continue to get paid in any outcome”.
Meanwhile, TikTok’s US General Manager Vanessa Pappas will fill in as interim CEO. Pappas worked at YouTube for seven years before joining TikTok in 2018 and has been a vocal defender of the app in the face of Trump’s various attacks.