Microsoft CEO Satya Nadella calls failed TikTok talks ‘the strangest thing I’ve ever worked on’
Microsoft CEO Satya Nadella offered new details about the company’s unsuccessful attempt to acquire TikTok a year ago as part of a larger discussion about the company’s M&A strategy during an appearance Monday night at the Code Conference.
“It’s the strangest thing I’ve ever worked on,” he told journalist Kara Swisher, host of the event, when she pressed him for details.
It was “the strangest thing I’ve ever reported,” Swisher agreed.
Microsoft was in talks with TikTok’s owner ByteDance to acquire the hit social video app’s operations in the U.S., Canada, Australia, and New Zealand, as then-President Donald Trump was threatening to ban TikTok in the U.S. due to privacy and security concerns. Ultimately TikTok struck a partnership with Oracle and Walmart that was shelved by the Biden administration earlier this year.
Nadella said it’s important to understand that TikTok originally came to Microsoft, looking for a cloud and security partner that could help the company navigate the minefield between Beijing and Washington, D.C.
“That’s kind of how it started,” Nadella said. “But I was pretty intrigued. I must say, it’s a great property. Obviously, everyone has seen that growth and what have you, and I guess the rest is history.”
In fact, just today, TikTok said that it’s reached 1 billion users monthly.
Swisher wouldn’t let Nadella get away with the “rest is history” brush-off, asking him about his discussions with then-President Donald Trump, whose threat to ban TikTok escalated efforts by ByteDance to find a partner that would allow the hit social video site to continue operating in the country.
“President Trump, I think had sort of a particular point of view on what he was trying to get done there, and then just dropped off,” Nadella said. “I mean, it was interesting. There was a period of time when I felt that the [U.S. government] had some particular set of requirements, and then they just disappeared.”
But why exactly did Microsoft want to buy TikTok?
Nadella cited the company’s investments in online child safety, social media and content moderation, as well as its work in cloud security. He said there were few companies that were up to the challenge.
“There’s the cloud platform, there is the security infrastructure that is very much required, because if you remember, at least at that time, the conversation was a complete fork off the code base,” he said. “Do we have the engineers to be able to take over a code base and then to secure it on an ongoing basis? That required competence, and on top of that, you better know something about running social media, which we know with either through Xbox Live or LinkedIn.”
He continued, “It was an interesting product, and also the way it was engineered, quite frankly, appealed a lot more to me and Microsoft. The way it’s about design and AI, I like that.”
Microsoft President Brad Smith goes into more detail on the talks in the recent paperback update to his book, Tools & Weapons. Smith writes that Trump’s comments to reporters on Air Force One in late July 2020, suggesting that he would rather ban the app than permit its sale to an American company, “threw into disarray the careful negotiations we had pursued with ByteDance” to buy TikTok’s business in the U.S. and the three other countries.
“Over the course of the day on Saturday, I called more than two dozen congressional leaders from both parties, asking them to intercede,” Smith writes. “On Sunday morning, Satya talked directly with President Trump, and the president relented.
Smith then “spent the afternoon hammering out with White House chief of staff Mark Meadows the text of an announcement we would make stating that the president was prepared to consider approving TikTok’s sale if it could be completed by September 15.”
Although the talks ultimately weren’t successful, Smith writes that they led to a larger insight: “that it’s possible to run a foreign technology service in a domestic data center with strict security, privacy, and digital safety controls in a manner that provides appropriate transparency to local government officials.
Smith explains, “In effect, this creates the opportunity to consider a new technology regulatory model for those instances where the US government wants technology trade to continue across the Pacific, but in a more controlled manner.”
At the Code Conference on Monday night, Swisher wasn’t as fortunate in getting Nadella to talk about Microsoft’s reportedly unsuccessful talks to acquire chat app Discord, which the company has not confirmed publicly.
“What is Discord?” Nadella joked.
The Code Conference runs through Wednesday in person in Beverly Hills, Calif., and streaming online.