China Lashes Out At Proposed TikTok US Sale To Microsoft

State controlled media outlets in China have warned the country will not accept the “theft” of TikTok and will respond.

It comes after Microsoft at the weekend confirmed it is engaged in preliminary talks to buy TikTok’s operations in the US, as the American government threatens to ban the app over national security concerns.

TikTok has already been banned in key markets such as India, over national security concerns and rising tensions after fighting between the two nations in the region resulted in the deaths of 20 Indian soldiers (including an officer). China claimed 43 of its soldiers were hurt.

TikTok acquisition

ByteDance (TikTok’s owner) has its headquarters in Beijing and it purchased Shanghai-based Musical.ly in 2017 and used it as the basis for TikTok, which became the first Chinese social media app to become broadly popular in the US.

Microsoft CEO Satya Nadella has already spoken with US president Donald Trump about the negotiations on Sunday, and said Redmond plans to conduct a full security review of the app.

This deal could potentially see Microsoft owning and operating the TikTok service not only in the US, but also Canada, Australia and New Zealand.

President Trump gave Microsoft until 15 September to make the deal to acquire the US operations. He also said the US Treasury should receive payment as part of the deal.

National security

ByteDance had already been facing national security concerns in the United States over the collection of personal data on US citizens by ByteDance, amidst a trade war between the US and China.

US treasury secretary Steven Mnuchin said on Sunday that TikTok must be sold off or banned due to national security concers.

Mnuchin chairs the Committee on Foreign Investment in the United States (CFIUS), which is reviewing TikTok.

President Trump told reporters last week he was planning to ban TikTok from the US.

ByteDance had been looking to divest its stake in TikTok’s US version, but would prefer an independent spin-off to a Microsoft sale, according to sources cited by the South China Morning Post.

In July the US Senate Committee on Homeland Security and Governmental Affairs unanimously passed a bill banning US federal employees from using TikTok on government-issued devices, which is to be taken up by the full Senate for a vote. The House of Representatives has also voted for a similar measure.

The CFIUS began a review into the Musical.ly purchase in 2019 and can recommend the president to block or reverse transactions.

And it should be noted that Microsoft is not the only rumoured suitor for TikTok.

Facebook, Apple, Amazon and Google would also have been likely buyer of TikTok, but all are currently under antitrust scrutiny, making a deal more complex.

US ‘theft’

On Monday, a spokesman for China’s ministry of foreign affairs said China firmly opposed any US action against Chinese software companies over national security concerns.

“The US generalises the concept of national security and, without any evidence, presumptions of guilt and threats against relevant companies,” Wang Wenbin was quoted by the Guardian as saying.

“This violates the principles of market economy and exposes the hypocrisy and typical double standards of the US in maintaining fairness and freedom,” said Wenbin. “It also violates the World Trade Organisation’s principles of openness, transparency and non-discrimination.”

And reports of TikTok’s acquisition by a US company has also triggered an angry reaction in Chinese media outlets, which are controlled by the Chinese state.

China will not accept the “theft” of a Chinese technology company and is able to respond to Washington’s move to push ByteDance to sell TikTok’s U.S. operations to Microsoft, the China Daily newspaper was quoted by Reuters as saying on Tuesday.

The United States’ “bullying” of Chinese tech companies was a consequence of Washington’s zero-sum vision of “American first” and left China no choice but “submission or mortal combat in the tech realm”, the state-backed paper reportedly added in its editorial.

China had “plenty of ways to respond if the administration carries out its planned smash and grab”, it warned.

Meanwhile the Global Times newspaper, which is also controlled by the Chinese state, said US treatment of ByteDance and Huawei Technologies, was indicative of US efforts to separate its economy from China’s.

China had “limited ability” to provide protection to these Chinese companies by retaliating against US companies, because the United States had technological superiority and influence with its allies, it added.

“China’s opening-up to the outside world and disintegrating the US decoupling strategy should be priorities,” it said in an editorial.