Talks about Microsoft to acquire TikTok in the U.S. led to an outcry on Chinese social media and criticism from a Chinese investor in ByteDance, TikTok's parent company, along with other prominent people from the country.
U.S. President Donald Trump earlier told reporters about his plan to ban TikTok operations in the U.S. and gave Microsoft and ByteDance 45 days to come to a deal.
The proposed acquisition would offer Microsoft an opportunity to take charge of TikTok's U.S. user data and become a major competitor to big social media platforms like Facebook and Snapchat.
Microsoft owns LinkedIn and now intends to buy TikTok's Canadian, Australian, and New Zealand interests as well. The company's shares experienced a 3% rise in early trades on Monday.
The deal talks haven't yet been confirmed by Microsoft. However, in a reported internal letter to staff this Monday, Zhang Yiming, ByteDance's founder and CEO mentioned that the firm had started talks with a tech company. The proposed deal is likely to enhance U.S.-China relations.
Reliable sources have revealed that while all of TikTok could be worth $50 billion, the forced division of its U.S. sales and other units will most probably generate a lesser amount.
Fred Hu, chairman of Primavera Capital Group and investor in ByteDance said that if the forced deal results in an unfavorable outcome to private stakeholders, it would lead to limitless litigations.
He further added that Microsoft is a credible buyer, but questioned the reliability of the deal for ByteDance considering the plan to sell large parts of TikTok's operations at an early stage of the company's growth.
Hu continued, saying that "Bytedance is an innocent victim of the mad politics and mad geopolitics. It is a sad outcome for Bytedance, for entrepreneurial capitalism, and for the future of global commerce."
A senior banker with a U.S. bank in Hong Kong said that the situation was hard to predict and that it'd be challenging for the company to structure the deal in such a way that would keep Washington happy.
Furthermore, Zhang Yiming's internal letter also mentioned that ByteDance did not agree with the stance taken by the Committee on Foreign Investment in the United States, to fully divest TikTok's U.S. operations.