Twitter begins talks to buy TikTok's US operations

Social media platform joins the race to acquire ByteDance's video streaming platform after last week's executive order banning it, Wall Street Journal says

Twitter shut down Vine, an app that let users to share short videos, in 2016 as a part of a cost-cutting initiative. AFP

Twitter has held preliminary talks with TikTok about a possible deal to buy the video streaming app’s US operations, making it a potential competitor to software company Microsoft.

The San Francisco-based microblogging site is considered a "long-shot bidder, given that it is much smaller than Microsoft and would have a harder time paying for the deal", the Wall Street Journal reported on Sunday.

It also said Microsoft's negotiations with TikTok's Chinese parent company ByteDance were at a far more advanced stage.

ByteDance is actively looking for a buyer for its US operations after President Donald Trump issued an executive order last week banning businesses and US residents from transacting with the app. The order will take effect in 45 days.

On August 2, Microsoft, the second-most valuable technology company in the world, said it was pressing on with discussions to buy TikTok's US business after its chief executive Satya Nadella held talks with Mr Trump.

It is unclear how much TikTok's US operations are valued at, but the figure could run into the tens of billions of dollars, raising questions about Twitter's ability to pay for the deal, the Wall Street Journal reported.

Twitter, which posted a $1.23 billion (Dh4.51bn) loss in the three months through to June 30, has a current market capitalisation of about $29.4bn, while Microsoft is valued at more than $1.6 trillion.

However, Twitter is not new to video streaming. It closed Vine, an app that allowed users to share short videos, as part of a cost-cutting initiative in 2016 after running it for more than three years.

It also has a live broadcasting app, Periscope.

Mr Trump is pursuing plans to ban TikTok in the US after officials expressed security concerns about the amount of user data it collected.

TikTok denied having any links to the Chinese government and said it planned to challenge Mr Trump’s administrative order.

"We are shocked by the recent executive order, which was issued without any due process … for nearly a year, we have sought to engage with the US government in good faith," TikTok said after last week's order.

“What we encountered instead was that the administration paid no attention to facts … we will pursue all remedies available to us in order to ensure that the rule of law is not discarded and that our company and our users are treated fairly – if not by the administration, then by the US courts,” it added.

TikTok has denied having any links to the Chinese government and said it plans to challenge Donald Trump’s administrative order. AFP

TikTok allows users to share video clips of up to 15 seconds. It has become popular with young audiences over the past year and has about one billion users in more than 140 countries.

Mr Trump has repeatedly insisted that the US Treasury should also receive a cut from the sale of TikTok’s US operations – an unprecedented move.

The grounds for extracting such a payout, similar to what investment banks and private equity companies call a finder’s fee, remain unclear.