In the latest statement, Trump reversed his attitude and agreed to Microsoft’s acquisition of TikTok, but the US government should receive payment from the transaction. Microsoft’s acquisition of TikTok seems to be about to land, but the details of the transaction, especially the issue of technical ownership, have not yet been clarified.
Following Microsoft’s public announcement on August 2 that it would continue to negotiate to acquire TikTok, on August 3 (Monday) Eastern Time, US President Trump made his first public statement on Microsoft’s negotiation to acquire TikTok.
Trump said that if TikTok fails to complete the sale by September 15, it will be banned in the United States. He also said that he has no objection to Microsoft or other American companies acquiring TikTok.
Trump also went out of his way to stress that a considerable portion of the money must be handed over to the U.S. Treasury after Microsoft or other companies complete their deal with TikTok.
However, the details of the acquisition are not yet clear. According to foreign media, specific details such as price, terms, payment method of the acquirer and technology sharing or asset transfer have not yet been agreed.
Most importantly, the success of TikTok is inseparable from a set of algorithms polished by ByteDance. As the core asset of ByteDance, this technology is difficult to package and hand over to American companies in the name of intellectual property.
If TikTok leaves the parent body of ByteDance, can it continue its glory under Microsoft’s control?
1. Trump reversed his position and agreed to acquire TikTok, but he would charge an “intermediary fee”
Following Microsoft’s public announcement on August 2 that it would continue to negotiate to acquire TikTok, on August 3 (Monday) Eastern Time, US President Trump disclosed the details of his weekend call with Microsoft’s CEO, making his first public statement on Microsoft’s acquisition of TikTok…
This time, Trump’s attitude has undergone a “big reversal”, from “not agreeing to the acquisition of American companies” to “as long as it is a very safe large American company to buy it.”
However, it also stated that the US company needs to buy TikTok in full, the acquisition must be completed before September 15, and an “intermediary fee” must be paid to the US government.
“For security reasons, it can’t be controlled by China. I don’t care if Microsoft buys it or who buys it, as long as it’s a big company, a safe company, a very American company.”
“It’s easier to buy the whole company than just 30% of it. My personal opinion is that you’re probably better off buying the whole company than 30%. The acquisition has to be done by September 15th, otherwise TikTok will be banned.”
In the end, whether Microsoft or other companies close their deal with TikTok, a significant portion of the money must go to the U.S. Treasury. “Because we made this deal possible.”
To Trump, it’s a bit like a landlord-tenant relationship. This acquisition will send a lot of money to China, so the U.S. should receive money in return for making the deal happen. However, Trump did not explain the specific operation of the “intermediary fee”.
The Wall Street Journal reported that President Trump’s claim has no precedent.
In any case, Trump’s statement at least shows that TikTok has been given a temporary “probation”.
Trump’s reversal this time is likely to be related to popular opinion.
Several aides to Mr. Trump have warned that the ban could spark a bitter legal battle and damage the president’s popularity with young Americans, The New York Times reported to people familiar with the matter. Recently, many young people have been carrying out the “Save TikTok” operation. And soon, the US presidential election will be held in November.
2. Foreign media: Trump’s impulse is confusing
Trump also determined to ban TikTok last Friday, and today gave the green light for the acquisition. The “confusion” not only confuses China, but also the American media. The New York Times yesterday criticized Trump.
“[The attitude toward TikTok]is just another example of the president’s unbridled, impulsive decision-making style, which is confusing to anyone.”
“China faces serious security and economic challenges. But Trump’s cult, demonization, and capriciousness has certainly hurt U.S. business interests, and actually reduced our influence over China.” Daniel Pry, former economic adviser to Bush Daniel Price said.
The New York Times pointed out that previous presidents have generally avoided political interference in companies, but Trump is different.
In 2016, for example, when United Technologies decided to close its Indianapolis factory and move furnace production to Mexico, Trump seized on the event, claiming that only he could get the company to stop moving jobs abroad.
He threatened to crack down on Carrier electric furnaces from Mexico with a 35 percent tariff. In the end, the Carrier plant decided to suspend the migration to save $7 million in taxes, and spent $16 million to renew the equipment. But in the end the Indianapolis factory left half.
Even more puzzling is that Trump’s decisions are often inconsistent. “Mr. Trump’s corporate decisions have been inconsistent, making it difficult for executives to anticipate requests or reactions from the White House,” the New York Times said.
When the coronavirus outbreak hit this spring, for example, Trump first rejected calls to use the Defense Production Act to pressure industry to make more masks and medical supplies, saying the move was akin to “nationalization” and that the government was not “Cargo Clerk”.
But later, he put pressure on 3M to produce N95, and he also “stands out” from not wearing a mask to finally wearing a mask on his own initiative.
3. After the acquisition, can TikTok, which is stripped of ByteDance, continue its glory?
Returning to the event itself, from the current situation, it seems that Microsoft’s acquisition of TikTok is an indisputable fact, but the details of the acquisition are not yet clear. According to foreign media, specific details such as price, terms, payment method of the acquirer and technology sharing or asset transfer have not yet been agreed.
At present, the most concerned issue for the outside world is whether the core algorithm is packaged in assets and sold to American companies.
ByteDance’s algorithm centers on artificial intelligence recommendation, analyzes user preferences through big data, and accurately pushes their favorite products. This algorithm has successfully created Toutiao and Douyin in China. TikTok also uses this core algorithm.
And this algorithm has irreplaceable competitiveness in foreign countries. After the launch of TikTok, overseas giants such as Facebook also have similar products, but they have not been successful. Because China has a huge user base and massive data. Douyin’s algorithm has been fully trained, and the experience can be ported to TikTok.
“If TikTok loses this core algorithm, it also loses the core point of competition with Facebook and future development, but from the perspective of ByteDance, whether in domestic or other markets, this algorithm is its core productivity. It is very difficult to package it into the hands of American companies in the name of intellectual property.”
“For TikTok, once it is divided, it is difficult to develop, because its ecology, including recommendation technology, recommendation engine, review, etc., uses the same set of middle platforms as Douyin, both built in China, if TikTok is in overseas markets If it is cut and operated independently, it may be difficult to continue its glory.”
It’s just that for Microsoft, the acquisition of TikTok is not a bad business. TikTok currently has more than 1.5 billion downloads in the Apple Store and Google Play Store, and is expected to be in third place, ahead of Facebook and Instagram.
The acquisition of TikTok is equivalent to seizing a new wave of technology-driven business, which is a rare opportunity for Microsoft, which has gradually fallen into “Internet anxiety” in the face of competition from Google, Amazon, and Facebook.
Yesterday, Reuters reported that the market’s unified offer for TikTok was US$50 billion, equivalent to 20 times TikTok’s expected annual revenue, but compared to the future of the market with unlimited potential, US$50 billion is obviously not enough.
At present, India, the largest overseas market of TikTok, has been banned, and the second largest market, the United States, will also fall into the hands of Microsoft, and its overseas business has been hit hard.
Yesterday, Zhang Yiming issued an internal letter, “Considering the current environment, we must also face the decision of CFIUS and the executive order of the US government, and at the same time not give up exploring any possibility.”
As part of exploring the possibility, ByteDance’s establishment of an overseas headquarters has taken shape. Yesterday (August 3), the British “Sun” reported that the location of the overseas headquarters may be set in London. On July 20, the British “Mail on Sunday” reported that TikTok plans to invest 3 billion pounds to set up a global headquarters in the United Kingdom. The UK is not opposed to the move either, with a government spokesman saying:
“ByteDance’s decision on the location of its global headquarters is a business decision for the company. The UK is a fair and open investment market that supports economic growth and jobs.”
Under such a situation, can ByteDance “recreate a TikTok” in the future?
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