Reuters reported that Microsoft's attempt to cut parts of TikTok from its Chinese owner, ByteDance, is so technical that it is a test of the patience of President Donald Trump's administration.
Trump gave Microsoft until September 15 to draw up a blueprint for an acquisition that would protect Americans' personal data stored on the short video app, and issued an order to block it if there was no agreement by then.
Microsoft is negotiating a transition period that will give it time to technically isolate TikTok from ByteDance after it agrees to the deal, Reuters reported on August 2. Some sources said the unimpeded secession envisioned by Trump and lawmakers could take a year or more.
A source familiar with the operation told Reuters that ByteDance began working on the technological separation between the two months ago, amid scrutiny by the US government. Reuters reported that the company had begun planning the split as part of a strategy to divert its authority from China.
According to people familiar with the matter, Tik Tok is functionally and technically similar to the company Douyin owned by ByteDance, which is only available in China, and shares the technical resources and other properties owned by ByteDance.
The source said that while the application code, which determines the look and feel of TikTok, has been separated from debt, the server code is still partly shared across other ByteDance products. Server code provides basic functionality for applications, such as data storage, content moderation and recommendation algorithms, and user profile management.
To ensure TikTok is uninterrupted, Microsoft will likely need to rely on the ByteDance code while reviewing and refining the code, and moving to a new back-end infrastructure to serve users, according to cybersecurity expert Ryan Spears at River Loop Security. That provides services, such as cyber security due diligence for transactions.
Ayman Mir, a former deputy assistant secretary of the Treasury in charge of the US Foreign Investment Commission (CFIUS), said that any continuing technical or operational dependence of US business on the Chinese company after the sale in general would be unacceptable to the investment committee. Foreigner in the United States.
Another challenge Microsoft faces is how to deliver what is seen as a "secret TikTok mix", the recommendation engine that keeps users glued to their screens. This engine or algorithm runs a page for you (For You) in TikTok, which recommends watching the following video based on an analysis of user behavior.
TikTok uses recommendation algorithms independent of Dwin, according to two sources familiar with the matter. But what makes it unique is the content and user information that is fed into the algorithm.
Microsoft is seeking a deal to buy all of the global TikTok business, the Financial Times reported Thursday, citing five sources familiar with the talks.
Microsoft said it is seeking to buy TikTok assets in North America, Australia and New Zealand. She did not disclose how much she was willing to pay, although sources previously told Reuters that ByteDance executives valued Tik Tok at more than $ 50 billion.
Karen C. Herman, deals attorney at Venable LLP, a legal consultancy, said the proposed timeline makes finalizing the transaction extremely difficult and “it can sometimes take months to identify the business needs, intellectual property and assets. Other companies that you use exclusively, and the assets and intellectual property that you share with other companies in the company group. "
And last week, Trump said he plans to block the TikTok app, amid concerns that its Chinese ownership poses a national security risk because of the personal data it deals with.