Microsoft has stated that its bid for TickTock was rejected at the US-China deadlock


WASHINGTON – The owner of the Chinese app TikTok on Sunday turned down an offer from Microsoft because of an executive order from the time the president threatened to ban President Trump, according to the company’s US officials and others involved in the negotiations. Popular app to handle operations until its US operations are sold.

Microsoft was seen as the American technology company with the deepest pockets to buy Tiktok’s US operations from its parent company, Bytdance, and had the greatest potential to address national security concerns because of Mr. Trump’s order. The move leaves Oracle – one of the few Silicon Valley companies to publicly associate with Mr. Trump – as the only publicly known bidder for TickTalk.

Bytdance has indicated that Oracle will be its “technology partner”, but it was unclear whether this means it will also take majority ownership of the app, people involved in the negotiations said.

Microsoft said in a statement, “Bytdance told us today that they will not sell Tiktok’s US operations to Microsoft. “We believe our proposal will be good for users of Tiktok while protecting national security interests.”

Bytdance declined to comment. An Oracle spokesman did not immediately respond to a request for comment.

Microsoft said in August that it would insist on a series of protections that would essentially give control of computer code that Ticketok uses for American and many other English-speaking versions. Weeks later, China issued new rules that would essentially prevent Tickcock from transferring its technology to foreign buyers without explicit permission from the Chinese government.

Chinese regulations helped ease Microsoft’s effort, stating that it could both protect the privacy of Tiktok users in the United States and prevent Beijing from using the app as a venue for divestment The underlying computer source code was to take the app, and algorithms that determine that 100 million Americans who use it watch the video each month.

Microsoft said in its statement, “We have made significant changes to ensure that the service meets the highest standards of security, privacy, online security and combustion disruption.”

Oracle has not said anything publicly what it will do with Tiktok’s underlying technology, written by a Chinese engineering team in Beijing – and which state secretary Mike Pompeo has alleged, for Chinese intelligence agencies responsible for the. This is a major concern of US intelligence agencies, led by the National Security Agency and the United States Cyber ​​Command, which have warned internally that anyone who can control the computer code – politically for specific users Can – or censor – a range of sensitive information from.

Bytdance and Tickcock have denied that they help the Chinese government.

Tiktok has become the latest flashpoint between Washington and Beijing over the control of technology affecting American life. The Trump administration had already banned Chinese telecommunications giant Huawei in the United States from selling next-generation, or 5G, networks and equipment, citing the risk of a foreign power controlling the infrastructure, all Internet communications. Flow.

On August 6, President Trump issued an executive order stating that Tiktok must strike an agreement to essentially sell its American works by Sept 20. He later issued a second executive order, giving ByteDance a few weeks after closing a sale.

This move took the US-China fight in a new direction. For the first time, the United States was trying to prevent a Chinese cultural phenomenon, with intense follow-up between American teenagers and millennials, which is likely to have a future impact with it.

Even though Oracle may try to close a deal, it is unclear whether Beijing will create new hurdles in the process. And the politics of the election year has left the negotiations hanging from the beginning. Unlike many other technology companies, Oracle has cultivated close ties with the Trump administration. Its founder, Larry Ellison, hosted a fund-razor for Mr. Trump this year, and its chief executive, Safra Katz, served on the president’s transition team and frequently visited the White House.

With Amazon, Oracle tried to win a $ 10 billion contract to run the Pentagon’s cloud services, one of the hottest tech contracts issued by the Trump administration. Microsoft eventually won that.

Oracle was also slated to provide administration with a system earlier this year to help with the planned study that would have enabled a wider release of the malaria drug hydroxychloroquine for the treatment of Kovid-19. While doctors warned that the drug could have dangerous side effects, Mr. Trump promoted its potential use to treat patients infected with coronavirus.

Oracle’s ties with the administration have been investigated. In August, a whistle-blower from the Labor Department said that Mr. Trump’s labor secretary, Eugene Scalia, had intervened in a pay discrimination case involving the company.

Last week on a call to discuss Oracle’s earnings, Ms. Katz told analysts that she and Min. Ellison would not discuss reports about his bid for Tickcock.

The rise of TikTok in the United States has been remarkably rapid; It has taken off in the last two years. ByteDance, founded in 2012, has raised billions of dollars in funding, according to a pitchbook tracking private companies, totaling $ 100 billion. Its investors include Tiger Global Management, KKR, NEA, SoftBank’s Vision Fund and GGV Capital.

In July, as pressure from the US government increased, BiteDance began discussions with investors to pull out Tickcock.

But the deal soon broke free from the bids of various corporations and investment institutions around the world and the new demands from the US and Chinese governments.

As the deal progressed, Sequoia Capital and General Atlantic, two of ByteDance’s biggest backs, sought to retain their hold in their valuable subsidiary to protect Tikotok from being rescued in the United States. Both firms are represented on the board of directors of ByteDance.

In late August the firms teamed up with Oracle to bid against Microsoft. Meanwhile, Microsoft tied up with Walmart to make its bid.

David E. from Washington Sanger and David McCabe reported; Erin Griffith from San Francisco reported.