Microsoft’s TikTok Offer Rejected as ByteDance Reveals it Will Not Sell Algorithm

Microsoft issued a statement Sunday revealing that its offer to buy the U.S. operations of short-form video platform TikTok has been rejected by ByteDance. Microsoft and Walmart were negotiating to buy the platform from the company, competing against other suitors including Oracle and Twitter, according to published reports.

“ByteDance let us know today they would not be selling TikTok’s U.S. operations to Microsoft,” the company wrote in a blog post Sunday. “We are confident our proposal would have been good for TikTok’s users, while protecting national security interests. To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation, and we made these principles clear in our August statement. We look forward to seeing how the service evolves in these important areas.”

Walmart also issued a brief statement Sunday: “Walmart continues to have an interest in a TikTok investment and continues discussions with ByteDance leadership and other interested parties. We know that any approved deal must satisfy all regulatory and national security concerns.”

The rejection of Microsoft’s offer follows U.S. President Donald Trump saying that he would not extend the deadline imposed by an August executive order compelling ByteDance to sell the U.S. operations of TikTok. That deadline date is Tuesday, according to what Trump said Thursday. 

But that was not the only development on Sunday related to the potential sale of TikTok: A source with knowledge of ByteDance boardroom discussions told the South China Morning Post that the algorithm source code used by TikTok will not be part of any sale. 

“The company [ByteDance] will not hand out source code to any U.S. buyer, but the technology team of TikTok in the U.S. can develop a new algorithm,” the source told the South China Morning Post. The source also told the publication that ByteDance had notified U.S. authorities and potential bidders of the decision.

This latest move is likely to avoid problems with the Chinese government, which recently revised export restrictions, forcing companies to secure a special license for the transfer of algorithms, text analysis, AI technologies, and more. TikTok uses this kind of software technology, which means ByteDance will need a special license from the Chinese government in order to finalize any sale. 

A sale will also have to be approved by the U.S. Treasury’s Committee on Foreign Investment in the United States.

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