Microsoft Calls Time Out on TikTok Talks: Report

U.S. President criticized plan and threatened to ban the popular video app.
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Microsoft Corp.  (MSFT) - Get Report is calling time out on plans to snap up the U.S.-based business of the popular Chinese-created app, TikTok, following President Donald Trump's criticism of the potential purchase, according the Wall Street Journal.

The news follows months of controversial headlines for the video-sharing application that was reportedly used as a tool for trolling teens trying to sabotage the attendance planning for a Trump rally earlier in the summer, security concerns because of its Chinese parent, and Trump's weekend threats to ban TikTok by executive action.

Microsoft declined to comment on the report in an email response to TheStreet on Sunday.

TikTok, however, told TheStreet in a statement that, "While we do not comment on rumors or speculation, we are confident in the long-term success of TikTok. Hundreds of millions of people come to TikTok for entertainment and connection, including our community of creators and artists who are building livelihoods from the platform. We’re motivated by their passion and creativity, and committed to protecting their privacy and safety as we continue working to bring joy to families and meaningful careers to those who create on our platform."

TikTok tried to placate the president following his threats by saying it would add thousands of U.S. jobs and for the founder Zhang Yiming to sell some of his stake in ByteDance, TikTok's owner, reported the Wall Street Journal, which relied on unnamed sources close to the negotiations.

ByteDance and Microsoft were advancing in talks for the deal before the president said he opposed it. The Journal characterized the progress as getting the OK of government officials because it would put TikTok in the hands of a U.S. company.

But the White House officials told the Journal in its report that, “The administration has very serious national security concerns over TikTok. We continue to evaluate future policy.”

Earlier this summer, the U.S. lawmakers had separately moved to ban TikTok from government-issued devices over security fears.

“I would distinguish between use of TikTok by U.S. federal employees and use by U.S. citizens in general," said Sarah Kreps, a Cornell University professor of government, in a statement at the time. "It's reasonable, given the uncertainties about whether the Chinese government could ultimately access user data and the attendant national security risks, to take a precautionary approach and limit the use of TikTok on official government devices. It should resist categorically banning TikTok, however, and instead continue to promote both the flow of content and enterprising ideas. TikTok's success has already spawned U.S.-based alternatives.”

TikTok defended itself to TheStreet on Sunday, however, boasting that 100 million Americans "come to TikTok for entertainment and connection, especially during the pandemic" and that is has hired nearly 1,000 people to the U.S. operations in 2020 and plans to eventually hire 10,000 additional employees.

This story has been updated with comments from TikTok and Microsoft.