
Microsoft to continue discussions on potential TikTok purchase in the US - wlrd
https://blogs.microsoft.com/blog/2020/08/02/microsoft-to-continue-discussions-on-potential-tiktok-purchase-in-the-united-states/
======
Shank
> The discussions with ByteDance will build upon a notification made by
> Microsoft and ByteDance to the Committee on Foreign Investment in the United
> States (CFIUS).

For me, this was the first time I've actually had to do a lot of thinking
about CFIUS and its implications. I definitely didn't understand the scale and
impact of CFIUS before, but now I'm at least aware of the power. I'm undecided
as to whether or not this is an appropriate power for the president to have,
but I think I'm much more relieved to understand the mechanism by which the
"TikTok ban" is being implemented than the very nebulous term "ban."

The reality is that this is the type of thing that can affect each and every
one of us in a new set of unexpected ways. Lawfare's explanation was
particularly shocking to me:

> TikTok (then called “music.ly”) was bought by ByteDance in 2018 for nearly
> $1 billion. Of course, music.ly like ByteDance was a Chinese company. So you
> might think that CFIUS would have no say over that acquisition. But you’d be
> wrong. For purposes of CFIUS review, a covered “U.S. business” is any entity
> that engages in interstate commerce in the United States—even if that entity
> is a foreign corporation. [0]

In other words, I'm at least thankful that I now know that the US has a legal
framework for this set of actions -- even if they're a bit shocking in the
first place.

[0]: [https://www.lawfareblog.com/tiktok-and-law-primer-case-
you-n...](https://www.lawfareblog.com/tiktok-and-law-primer-case-you-need-
explain-things-your-teenager)

~~~
mike00632
Yes, the CFIUS needs to be reexamined because its use in this case seems
objectively capricious. It boggles my mind that all of this can be done with
no evidence presented of wrongdoing. I understand that some aspects of cyber-
security in the government are classified but there should at least be an
effort to explain precisely what types of data TikTok is suspected of
collecting. Instead we have Mike Pompeo giving glib answers to questions,
saying that TikTok sends "personal information" to the Chinese Communist Party
(operative word being "communist" I guess).

Another reason the executive branch should give detailed reasoning for their
decision is to avoid the appearance of impropriety. Right now it seems like
Trump is simply mad at TikTok because some users allegedly reserved tickets to
his Tulsa rally in order to spoil turn out (it should be mentioned that this
also was reported by the media without hard evidence).

~~~
someperson
I think the reasoning of the US government is that every private company in
China is an arm of the state since everybody in China is required by law to
help China's intelligence service via article 7 of China's National
Intelligence Law (and any company with more than 50 people including
Douyin/TikTok is required to have a Chinese Community Party secretary so even
more state influence)

And because the government of China's long track record of data theft for
commercial gain the Trump administration sees it best to use CIFIUS to ban all
companies from China that collect _any_ sensitive information (whether
personal or corporate), even if they haven't found a smoking gun that the
government of China has misused the data yet.

I don't believe the Trump administration is going for complete economic
decoupling with China at this stage (though I personally wish they were), but
they certainly are going for banning applications with any access to sensitive
information at all. Through this reasoning I am fully expecting applications
such as AirDroid (made by Beijing-based Sand Studio) to be banned sooner
rather than later.

~~~
mike00632
1\. If the reasoning is that a hostile foreign government could use sensitive
data against the US and thus shouldn't be allowed to collect such data then
such policy is being arbitrarily enforced. There are other companies (FaceApp
comes to mind) that collect data on Americans that don't have such scrutiny
from the executive branch. Furthermore, American companies that collect
sensitive data regularly give access to foreign entities (e.g. Cambridge
Analytica, which abused Facebook's sharing agreement with academic
institutions but there nonetheless exists such sharing agreements). If the use
of CIFIUS is a part of a broader strategy against China then such a strategy
should be outlined somewhere, announced and debated in Congress. This is a
special decision taken unilaterally against TikTok.

2\. I don't think the executive branch's reasoning is limited to the potential
of abuse. Representatives of the Trump administration have stated that they
are concerned with data that TikTok currently collects, which they say merits
a national security concern. It seems like they are making these claims to get
the public on board with the measures, but claims like this require specifics
and evidence. Even if I agree with TikTok being banned from the US over
security concerns, I don't want to feel propagandized by the US government.

3\. What sensitive data are we talking about!? This is the elephant in the
room. It seems like the big concern is over email address + geographical
location + TikTok viewing history + images of faces. TikTok still lives on
platforms that are heavily sandboxed and secured by very interested teams at
Google and Apple. Nobody has made a credible accusation that TikTok is
exploiting some zero day to gain access to users' sensitive data.

4\. This isn't a part of a broader talk about the dangers of tech companies
collecting too much data. There doesn't seem to be any plans to restrict data
collection nation-wide. Maybe the executive branch is taking this on a case-
by-case basis but a more reasonable explanation seems to be that Trump simply
doesn't like TikTok or is using his power to muscle out foreign businesses as
a bargaining chip in a larger China dispute.

~~~
someperson
I agree with you that the use of CIFIUS as a broader strategy should be
debated by Congress rather than just using executive action.

The sandboxing by Google and Apple is not relevant given users are willingly
giving TikTok access to the camera, GPS etc. The sensitive information
includes the ability to build detailed user profiles (including psych
evaluations) of every TikTok user in the world. At least that's my impression
from my research into this so far.

~~~
bromuro
Well the US companies that control our smartphones could force the app to not
access most of these data, eg like blocking the GPS.

------
exanimo_sai
The takeaways from this potential acquisition for me: \- The splinternet is
real - as a foreign business with US interests be aware which side of the
splinternet you are positioned. (Stratechery wrote a good piece of the four
way split of the internet between US, China, India and EU
[https://stratechery.com/2020/india-jio-and-the-four-
internet...](https://stratechery.com/2020/india-jio-and-the-four-internets/))
\- While this may appear as a weird adjacency for Microsoft to go into they
have successfully run Xbox a consumer business for many years \- The
consumption ecosystem from user data and behaviour from TikTok acquisition can
only bolster Microsoft \- Social capital is a lucrative currency for any tech
company especially one such as MS who has a lot of catching up to do to other
Big Tech -

~~~
throwmeaway2344
MSFT will do whatever it takes to keep that JEDI contract

~~~
JacKTrocinskI
How does this relate to the JEDI contract?

~~~
JetSpiegel
10 billions in guaranteed revenue over 10 years is not something to scoff
about.

------
ocdtrekkie
Seeing a company post an official blog post about having discussions about an
acquisition seems super weird to me. But I suppose once the President is
ranting about it on Twitter, it's hard to follow the usual processes.

------
qppo
On the one hand, this is probably a good move made for the wrong reasons.

On the other, I feel like if we're going to force a divestment in the name of
national security for a social media app, maybe we should have all our social
media apps operating domestically abide by strong privacy protections and data
isolation policies.

~~~
pm90
You may want to read up a bit on how lobbying works.

US based companies enjoy 2 benefits when it comes to regulation: 1) “Domestic”
factor which makes them immediately above suspicion of wrongdoing by the
National Security apparatus and 2) Access to the legal lobbying infrastructure
which they use to protect their interests.

The interests of both Domestic firms (who want to neutralize a fast growing
threat) and the National Security apparatus align in this case, which is why
the parent company seems to have accepted the fact that it would need to sell
off its interests in TikTok. Their interests do not align so much when it
comes to protecting user data (arguably for certain 3 letter agencies, they
align in favor of fewer user privacy measures).

For those that wonder why big technology firms all seem to be based in the US,
there isn’t something magical about the US. It is mostly the State assisting
domestic firms in neutralizing international competitors.

~~~
qppo
Not really sure why you need to be condescending, because what you're talking
about isn't how lobbying "works" nor is it how business works in the United
States.

>“Domestic” factor which makes them immediately above suspicion of wrongdoing
by the National Security apparatus

This for example, is not true.

~~~
rswail
It definitely doesn't make them "above suspicion" but it does change which of
the Federal TLAs have jurisdiction for surveillance and investigations.

------
NiceWayToDoIT
Is it just me or Microsoft has a track record of ruining products they
acquired? Skype, Nokia, Minecraft, Wunderlist...

And I am afraid about fate of the GitHub ...

There is a huge list here:
[https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitio...](https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Microsoft)

how many of those survived?

~~~
pjmlp
Nokia is doing quite well, not only did they use to money to buy back the
Siemens part on the Networks business, they now own Bell Labs.

Also despite being only Nokia branded, their Android phones are just as good
as ever, and the only Android brand that I actually get updates on, versus the
one shot update in a device's lifetime that I have had from other OEMs.

~~~
detaro
The Nokia that is doing well now is not the part that got bought by Microsoft
though?

~~~
pjmlp
Nokia is a big company, with a long history.

They had two main branches Nokia Mobiles and Nokia Networks, Nokia Networks
eventually joined the networking business from Siemens and thus became Nokia
Siemens Networks.

Microsoft did their business with Nokia Mobiles business division, which as we
all know they end up acquiring it.

With that money, Nokia bought back the NSN part that belonged to Siemens,
replacing Siemens with Solutions on the name.

Many of the people nowadays working for Nokia branded HMD Global phones are
actually former Nokia Mobile employees, and the Espoo building is the same I
used to visit a couple of times as NSN employee.

------
xnx
Seems like a huge win for Microsoft to be able to buy the hottest social media
service at a fire sale price. Will other bidders be allowed?

~~~
partiallypro
Other companies are also in talks, but Microsoft is the furthest along/having
the best chance.

~~~
techntoke
Almost every kid at my daughter's elementary school has TikTok installed and
they are all under 13. If you have an Android phone, they do basically no
verification to register and then if you go to your Google Account you can see
that they share your email and personal data with TikTok. This is a major
COPPA violation. Does this mean Microsoft may soon be the biggest violator of
COPPA in the US?

~~~
8organicbits
In practice, can't that easily be resolved by prompting each user to verify
they are at least 13 years old, enter their age, or enter their birthday?

~~~
cable2600
Enter their birthday. My son and his friends and cousins always enter the year
of their birthday as 1955 so that they appear to be old men when they were
under 13. They never answer honestly and it is like having a fake ID.

Microsoft used to have a Passport service that could verify a user, just add
in an ID to verify age scan your driver's license or whatever and send it to
Microsoft passport. It is an extra step but you don't want the kiddies looking
at nudes and violence and hate speech.

------
dave_aiello
There is some really good history of the Committee on Foreign Investment in
the United States (CFIUS) found in this Foster Garvey Cross-Border Business
Law Blog post from 2018, [https://www.foster.com/cross-border-business-law-
blog/cfius-...](https://www.foster.com/cross-border-business-law-blog/cfius-
concerns-with-chinese-investments-and-acquisitions-in-the-united-states).

------
throw554364
> _The two companies have provided notice of their intent to explore a
> preliminary proposal that would involve a purchase of the TikTok service in
> the United States, Canada, Australia, and New Zealand and would result in
> Microsoft owning and operating TikTok in these markets. Microsoft may invite
> other American investors to participate on a minority basis in this
> purchase._

If the deal passes, Microsoft will get TikTok in four of the Five Eyes
countries. I wonder why the UK service is not included?

This also means there will be a TikTok US, TikTok Global, and Douyin.

Perhaps the next phase for ByteDance will be completely separate TikToks where
they license the technology to local companies. Then these local companies can
sign content deals with other countries if they want to share.

------
someperson
Why didn't Microsoft buy Vine when Twitter was struggling a few years ago?

~~~
giancarlostoro
Vine was married to Twitter for login / registration. It made the most sense
for Twitter to buy it. Microsoft's hitting a momentum of growth currently,
which might be a good time for them to make some acquisitions, they've also
started booting back up some of their game studios as well.

~~~
someperson
Grandfathering existing user's Twitter login then having all new users use a
new login system would not have been hard.

------
xttblog
I'm worried about the business environment in the United States. At least some
evidence should be found or produced to show that tiktok should be banned!

~~~
casefields
Burning sources and methods to placate the public is usually a waste. That's
why we elect representatives at different levels.

------
badwolf
I think the odd thing for me, is this just after Microsoft abruptly shut down
Mixer.

~~~
ddlutz
Why is this odd? They seem like very different products to me.

------
ffggvv
does anyone know if all the music on tiktok is properly following copyright
law etc? and will microsoft be in the hook for removing all this content with
dmca?

~~~
bestnameever
I imagine many of it is either paid to be on there or intentionally placed on
there. It's great for visibility and PR.

------
bigpumpkin
“MY STYLE of deal-making is quite simple and straightforward. I aim very high,
and then I just keep pushing and pushing and pushing to get what I’m after.”

“I've read hundreds of books about China over the decades. I know the Chinese.
I've made a lot of money with the Chinese. I understand the Chinese mind.”

― Donald Trump, Trump: The Art of the Deal [1]

[1][https://www.amazon.com/Trump-Art-Deal-
Donald-J/dp/0399594493](https://www.amazon.com/Trump-Art-Deal-
Donald-J/dp/0399594493)

