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Social media platform joins the race to acquire ByteDance’s video streaming platform after last week’s executive order banning it, Wall Street Journal says
Twitter has held preliminary talks with TikTok about a possible deal to buy the Chinese video streaming app’s US business, providing potential competition to software giant Microsoft.
The San Francisco-based microblogging site is seen as “a long-shot bidder given that it is much smaller than Microsoft and would have a harder time paying for the deal”, the Wall Street Journal reported on Sunday. It added that Microsoft is also much further advanced in its negotiations.
TikTok’s parent company ByteDance is actively looking for a buyer for its US operations after US President Donald Trump issued an executive order last week banning businesses and individuals from transacting with it. The order will take effect in 45 days.
On August 2, Microsoft – the second-most valuable tech firm in the world – confirmed it is holding discussions to buy TikTok’s US business after its chief executive Satya Nadella held talks with Mr Trump.
It is unclear how much TikTok’s US operations are valued at, but it is likely to run into the tens of billions of dollars, raising questions about Twitter’s ability to pay for the deal, the WSJ said.
Twitter, which reported a $1.23 billion (Dh4.51bn) loss in the three months to June 30, has a current market capitalisation of about $29.4bn, whereas Microsoft is valued at more than $1.6 trillion.
Twitter is not new to video streaming, though. It closed Vine, an app that allows users to share short videos, as part of a cost-cutting initiative in 2016 after running it for more than three years. It also has a live broadcasting app, Periscope.
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Mr Trump is pursuing his plan to ban TikTok in the US after officials expressed security concerns about the amount of user data it collected.
TikTok has denied having any links to the Chinese government and said it plans to challenge Mr Trump’s administrative order.
“We are shocked by the recent executive order, which was issued without any due process … for nearly a year, we have sought to engage with the US government in good faith,” TikTok said in a statement after last week’s order.
“What we encountered instead was that the administration paid no attention to facts … we will pursue all remedies available to us in order to ensure that the rule of law is not discarded and that our company and our users are treated fairly – if not by the administration, then by the US courts,” it added.
The video streaming app, which allows users to share video clips of up to 15 seconds, has become hugely popular in the last year.
It is popular among teenagers and now has about one billion users in more than 140 countries worldwide.
Mr Trump has repeatedly insisted that the US Treasury should also get a cut of any sale of TikTok’s US operations – an unprecedented move. The grounds for extracting such a payout, equating to what investment banks and private equity firms call a finder’s fee, remain unclear.