Microsoft could reportedly pay between $10 billion and $30bn to buy TikTok’s US business from its Chinese parent company ByteDance, according to CNBC.
The US technology giant, which is the second-most valuable tech firm in the world, plans to finish its acquisition talks with TikTok within next three weeks, ahead of a September 15 deadline, the news channel reported.
The US Treasury Secretary Steve Mnuchin is “deeply involved” in the process and Microsoft has pledged to bring TikTok’s backend and engineering code – which are mainly housed at ByteDance’s Beijing headquarters – to the US within one year.
“Very few American companies have the bandwidth to transfer large amounts of data over to their own systems within a year … let alone afford the billions TikTok will cost,” the report said.
“Microsoft could likely transfer TikTok’s software code, which could be up to 15 million lines of artificial intelligence, helping cement its position as the leading contender to acquire the company,” it added.
If successful, the acquisition would result in Microsoft owning and operating TikTok in the US, Canada, Australia and New Zealand.
It is also expected to invite other US investors as minority stakeholders in the bid.
The US President Donald Trump revealed his plans to ban the social media app within the US last week after American officials and politicians expressed security concerns that it was being used by Beijing for nefarious purposes.
TikTok has denied having any links to the Chinese government.
On Sunday, Microsoft confirmed it will continue discussions to buy TikTok’s US business after its chief executive Satya Nadella held talks with Mr Trump.
Mr Trump has repeatedly insisted that the US Treasury should get a cut of any sale of TikTok’s US operations – an unprecedented move. The grounds for extracting such a payout, which is equivalent to what investment banks and private equity firms call a finder’s fee, remain unclear.
The wildly popular streaming app has gained immense popularity in the past few months.
It has become a go-to for teenagers, allowing them to share video clips of up to 15 seconds. Available in more than 140 countries, it has about one billion users worldwide.
TikTok is valued at $50bn – 50 times its projected 2020 revenue of about $1bn, according to Reuters. Whereas, its peer company Snap is valued at 15 times its estimated 2020 revenue, at about $33bn, according to data provider Refinitiv.
TikTok was launched in China in 2016 and released in the US in 2018 after ByteDance’s purchase of lip-synching app Musical.ly.
The Committee on Foreign Investment in the US has been reviewing the purchase of Musical.ly that was later folded into TikTok.
TikTok said it had hired about 1,000 people in the US this year and plans to hire another 10,000.