2021 Microsoft and ByteDance Investors Eye $50B TikTok U.S. Acquisition Amid Ban Threat
Explore the ongoing efforts by Microsoft and investors to acquire TikTok's U.S. operations as the app faces a potential ban due to national security concerns.
As TikTok faces increasing scrutiny and a looming ban in the United States, Microsoft and key investors are actively pursuing acquisition talks to secure the app's U.S. operations. This move comes amid national security concerns raised by the Trump administration, which is aiming to prohibit TikTok and other Chinese-owned apps on American soil.
- The Trump administration is set to ban TikTok and other Chinese apps in the U.S.
- Microsoft and investors are negotiating to acquire TikTok's U.S. business.
- TikTok boasts 80 million active monthly users in the U.S., making it the most downloaded app in Q1 2021.
Following its ban in India, TikTok, the viral short-video platform launched in 2016 and introduced to the U.S. market in 2018, now faces a similar fate in the U.S. Microsoft is reportedly in advanced discussions to purchase the app's American operations, which serve up to 80 million monthly active users. This development follows President Trump's announcement of an impending executive order targeting TikTok. The platform assures that all U.S. user data remains within the country, with CEO Kevin Mayer—formerly Disney's streaming chief—pledging enhanced transparency and releasing the platform's algorithmic code to bolster trust and secure its future.
TikTok is owned by ByteDance, valued at $140 billion and recognized as the world's most valuable unicorn by CB Insights. The company’s investors include Sequoia Capital China, SIG Asia Investments, Sina Weibo, and SoftBank Group. In response to deteriorating U.S.-China relations, ByteDance has increased its lobbying efforts, spending $800,000 in the first half of 2020 compared to $270,000 throughout the previous year.
The app’s popularity soared during the global quarantine, surpassing 2 billion global installs by April 2021 and achieving over 300 million downloads in the first two quarters alone, according to SensorTower. This milestone places TikTok alongside only a few apps like Zoom and Pokémon GO that have reached such high quarterly download numbers. In the U.S., TikTok consistently ranked among the top two apps by downloads in both Q1 and Q2 of 2021.
Top U.S. App Downloads in Q2 2021
Despite President Trump's opposition to Microsoft’s acquisition of TikTok, the tech giant remains committed to finalizing the deal by September 15, 2021. The proposal includes acquiring TikTok’s operations not only in the U.S. but also in Canada, Australia, and New Zealand. The agreement would require ByteDance to fully divest its stake, ensuring all American user data is stored exclusively within the U.S. Additionally, TikTok has pledged to create 10,000 jobs domestically. Reuters reports that ByteDance investors have also proposed a deal transferring majority ownership of TikTok to them, valuing the company at approximately $50 billion.
If acquisition efforts fail and TikTok is banned in the U.S., the backlash from users is expected to be significant. Many popular creators have already directed followers to alternatives like Facebook’s Instagram and Google’s YouTube. Facebook is launching its short-form video app, Reels, in the U.S. this month, while other apps stand to benefit as well. SensorTower data reveals that following the White House’s announcement in early July, the American app Byte, created by Vine co-founder Dom Hofmann, surged to 1.3 million downloads—163 times more than prior weeks. Similarly, New York-based Dubsmash experienced a 282% increase, climbing from 118,000 to 451,000 downloads.
Stay tuned for further updates on this evolving story as Microsoft and ByteDance investors navigate the complex landscape surrounding TikTok’s future in the U.S.
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