show image

Microsoft’s TikTok buyout would cover every Five Eyes nation other than the UK

Microsoft’s bid to buy a significant part of TikTok’s international operations includes the app’s presence in every Five Eyes nation other than the UK, it has emerged.

The US tech giant revealed in a blogpost on Sunday night (2 August) that it is in talks to buy TikTok’s operations in the US, Canada, Australia and New Zealand.

But the discussions, which have the support of Donald Trump, do not cover the UK – the only other member of the Five Eyes intelligence alliance.

The UK’s omission from the proposed deal comes amid negotiations over where to locate TikTok’s headquarters. ByteDance, which currently owns all of TikTok’s international operations, is reportedly planning to position the HQ in London. The Sun reported earlier on Monday (3 August) that ministers have signed off on the move and an announcement is due to be made next week.

Alan Woodward, a professor of cyber security at the University of Surrey, described the UK’s omission from the Microsoft deal, set against plans to relocate the headquarters to London, as “awfully coincidental”.

“I don’t believe in coincidences like that, but the big question then is what happens to the servers,” he told NS Tech. “At the moment the servers for international users are based in Singapore and the US. Does it mean that the UK users get their servers here?”

Talks with Microsoft commenced as the Trump administration threatened to ban TikTok amid concerns that Chinese security legislation could force the company to hand over user data to Beijing. TikTok has said it has never been asked to and that it would challenge any requests.

Microsoft said in its statement that it “will move quickly to pursue discussions with TikTok’s parent company, ByteDance, in a matter of weeks, and in any event completing these discussions no later than September 15, 2020. During this process, Microsoft looks forward to continuing dialogue with the United States Government, including with the President. […]

“This new structure would build on the experience TikTok users currently love, while adding world-class security, privacy, and digital safety protections. The operating model for the service would be built to ensure transparency to users as well as appropriate security oversight by governments in these countries.”

The Microsoft deal has raised questions about whether two versions of the app will be established to create a firewall surrounding the data processed in the US, Canada, Australia and New Zealand.

A TikTok spokesperson did not respond to a request for comment on that matter, but said: “ByteDance is committed to being a global company. In light of the current situation, ByteDance has been evaluating the possibility of establishing TikTok’s headquarters outside of the US, to better serve our global users.”

An unexpected backer

TikTok might seem an unusual fit for Microsoft, which, despite owning LinkedIn, is better known for its unglamorous, but highly profitable, enterprise software and cloud computing products than it is for social networking.

In the past the company’s president, Brad Smith, has poured scorn on the firm’s advertising-funded rivals, and suggested that rather than harvesting data – or in his metaphor, gold – Microsoft is “in the business of providing tools so that there can be gold-miners”, as he put it to the New Statesman last year.

Nevertheless, TikTok is growing at an astonishing speed and there is speculation that, facing pressure from the US government, ByteDance might be forced to sell it for less than it’s worth. For Microsoft – a company that has failed to keep up with its rivals in the online ad market – it may be an offer that’s too good to resist.