This comes after Trump had threatened to ban the social networking service in the US
On Sunday, Microsoft announced in a blog post that it would continue holding talks to buy TikTok in the United States, opening up the possibility of using its financial might to buy the video sharing app.
Microsoft made the announcement after its chief executive, Satya Nadella, talked with President Trump, who had threatened to ban the hugely popular social media company, which is owned by China’s ByteDance, because of national security fears. On Monday, Mr. Trump said that TikTok would shut down in the United States on Sept. 15 unless Microsoft or another company bought it.
A deal for TikTok — whose app featuring video clips has become wildly popular among young smartphone users — could give Microsoft control of one of the largest and most influential social networks in the country.
Microsoft is viewed as your grandpa’s company, and it is trying to change that, said Dan Ives, a managing director and an analyst at Wedbush Securities. Microsoft goes from an uncool company to many under 25 to potentially as hip as TikTok if they get this done.
Microsoft declined to comment beyond its blog post.
Under Mr. Nadella, who became chief executive in early 2014, Microsoft has turned the company into a giant of cloud computing. It has a market value above $1.5 trillion and more than $130 billion in cash.
But Microsoft has not had a clear path to serving young consumers beyond its video gaming business. The company is behind the Xbox video game console and owns Minecraft, the hugely popular building game. As social media grew into enormous consumer businesses — Facebook alone is worth more than $720 billion — Microsoft largely missed out. Under Mr. Nadella, Microsoft’s biggest acquisitions have been of online communities, those whose networks hooked users but also required a complex cloud-computing infrastructure that Microsoft could provide.
In 2014, it bought the Swedish company that created Minecraft for $2.5 billion, and in 2016, it acquired LinkedIn, the professional social network, for $26.2 billion. In 2018, Microsoft bought GitHub, an online network for software developers, for $7.5 billion.
With those recent acquisitions, Microsoft increased the financial and tech resources at the companies but largely let them run independently.
When Christopher Wanstrath, co-founder of GitHub, discussed the deal in a call with investors after it was announced, he said the way Microsoft handled Minecraft and LinkedIn showed him “how serious they are about growing new businesses while maintaining their independence and identity.”
Analysts say that patient approach has been successful. Until the coronavirus pandemic, LinkedIn had been growing faster under Microsoft’s ownership than before it was acquired.
TikTok, with its fun artificial intelligence tools and more than 100 million users in the United States, would most likely fit that pattern. To be successful, its owner would need to run the technology and sustain its online community. The deal being discussed involves purchasing TikTok offices in the United States, Canada, Australia and New Zealand. ByteDance, the parent company of TikTok, would continue to own the social media app’s offices in Beijing.
Mr. Nadella’s conversation with Mr. Trump appeared to assuage the president’s worries about TikTok’s security, at least temporarily. The concern of the American government is that the app potentially gives the Chinese government access to American user data. Microsoft’s statement said it would “ensure that all private data of TikTok’s American users is transferred to and remains in the United States.”
On Sunday evening, the news of continuing talks quickly garnered praise from Republican lawmakers.
Senator Lindsey Graham of South Carolina, who spoke with Microsoft officials a few times about the deal, tweeted that the talks between TikTok and Microsoft were “a win-win in the making.” And Representative Kevin McCarthy of California, the House minority leader, said it “would protect Americans’ data, increase competition and secure a creative platform for millions of users.”
Microsoft, said analyst Mr. Ives, “realized there is a window in the clouds that just opened up, and they have to fly right through.”