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Microsoft's TikTok deal reportedly ballooned after Trump intervened

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Key Points
  • Microsoft's deal talks with TikTok "ballooned" this summer after President Donald Trump intervened, according to a report from The New York Times.
  • Earlier this month, Trump said he'd rather TikTok was bought in its entirety. 

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TikTok is growing rapidly, even as it fights a U.S. government ban

Microsoft's acquisition talks with TikTok and its Chinese parent company ByteDance "ballooned" this summer after President Donald Trump intervened, according to a report from The New York Times, citing people familiar with the situation. 

ByteDance is being forced to sell TikTok's U.S. business by the Trump administration, which says the app's current ties to China make it a national security threat. An executive order signed by Trump on Aug. 6 means a sale must go through before Sept. 15. However, TikTok sued the U.S. government on Monday, alleging it was deprived of due process. The lawsuit could delay the ban, giving TikTok more time to get a better deal for the sale.

When the deal talks began, Microsoft is said to have been reluctant to do any kind of large TikTok acquisition, due in part to the rising tensions between the U.S. and China, according to the Times report. However, a minority stake in the wildly popular video sharing app was viewed positively as it may lead to TikTok ditching Google Cloud, which it currently uses, and signing up to Microsoft Azure, instantly making it one of Microsoft's largest cloud customers. TikTok could also be integrated with Microsoft's $7 billion advertising business. 

Microsoft issued a statement on Aug. 2 about its pursuit to buy TikTok's U.S. business. However, on Aug, 3, Trump said he'd rather Microsoft, valued at $1.6 trillion, purchase the app that is used by 100 million Americans in its entirety. "I think buying 30% is complicated," Trump told reporters in the Cabinet Room at the White House.

There are now several other bidders competing with Microsoft, with the main one being enterprise software firm Oracle. Netflix and Twitter have also been contacted by bankers and investors, but it's not clear if they're interested, according to the Times. In any case, deal talks between the parties have "morphed into a big, messy, political soap opera," according to the report.

As for the price of TikTok, that's anyone's guess, but estimates range from $20 billion to $50 billion, depending on which bits of the company are sold. CNBC's David Faber reported earlier this month that Microsoft was discussing a range of $10 billion to $30 billion to buy TikTok. A deal with Microsoft could boost the valuation of TikTok's business outside China to up to $80 billion, according to sources cited by The Times. It's worth noting that any deal that is agreed upon could easily be derailed by Washington or Beijing. 

Microsoft and TikTok declined to comment when contacted by CNBC. 

Read the full story in The New York Times here

VIDEO2:4402:44
TikTok is growing rapidly, even as it fights a U.S. government ban