Trump Pressures "TikTok to Sell to US Company Within 45 Days"... Signs Executive Order (Summary)

TikTok and WeChat Face Trading Ban After 45 Days Citing 'National Security' Concerns

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Microsoft (MS), which is pursuing the acquisition of the Chinese social networking service (SNS) TikTok, is reportedly negotiating a plan to take over the entire global business, beyond just the business rights in the United States and some other regions.

On the 6th (local time), President Donald Trump signed an executive order stating that "all transactions with ByteDance within the United States will be banned after 45 days," effectively establishing a legal basis to expel TikTok. Accordingly, the negotiation deadline between TikTok and Microsoft (MS), which are negotiating the acquisition of the entire global business as well as the U.S. business, has become tight.

On the same day, Bloomberg News reported that MS is negotiating to acquire TikTok's global business operations, including the U.S., India, and Europe. Initially, MS was negotiating to acquire TikTok's business operations in the U.S., Canada, Australia, and New Zealand, but India and Europe have now been added. Since TikTok does not operate in China, this essentially means MS intends to acquire TikTok's operating rights in all regions worldwide.

A source explained that discussions are underway for MS to acquire all of TikTok, citing the need to provide uninterrupted service when TikTok users travel to other countries.

The problem is that as the scope of negotiations expands, it is uncertain whether the talks will conclude by the deadline set by President Donald Trump for the acquisition negotiations between MS and TikTok, which is next month on the 15th. President Trump signed an executive order banning all transactions between TikTok and its parent company ByteDance after 45 days. U.S. media interpreted this as "pressure to sell TikTok's U.S. business unit to an American company within 45 days."

There was no further explanation regarding the meaning of the transaction ban, and the Associated Press interpreted it as "an ambiguous term" that "could mean TikTok and WeChat should be removed from Apple’s or Google’s app stores."

Separating TikTok’s technology from ByteDance is a separate issue. MS was also discussing adding a clause to the acquisition contract allowing a one-year period after acquiring TikTok to separate it from ByteDance, but this has also become uncertain due to President Trump's executive order.

Acquiring TikTok’s business operations in India is also considered a major issue. ByteDance is open to the possibility of transferring TikTok’s Indian business segment to a foreign operator other than MS or to an Indian company. If the Indian market operating rights are transferred to a company other than MS, ByteDance can maintain a minority stake in India, the largest market, and receive profits generated there.

According to Sensor Tower data, India is TikTok’s largest market, recording 650 million downloads. However, amid heightened anti-China sentiment in India following clashes between Indian and Chinese troops in the Himalayas, the Indian government banned the use of TikTok and 59 other Chinese applications (apps) citing national security reasons.

Meanwhile, TikTok announced plans to invest 420 million euros (approximately 600 billion KRW) to build its first data center in Europe, located in Ireland. Additionally, ByteDance, TikTok’s parent company, is reportedly considering establishing TikTok’s global headquarters in London.