Microsoft is in talks to split up TikTok, the Chinese viral video sharing app, in a deal aimed at appeasing President Donald Trump, after he threatened to ban it in the US.
But the future of TikTok in Europe and the UK has now been thrown into confusion.
On Sunday, when Microsoft chief executive Satya Nadella confirmed the talks with TikTok’s parent company Bytedance, he said he wanted to buy TikTok’s operations in the US, Canada, Australia and New Zealand.
But why were the UK and Europe left out?
A soft-touch approach to regulation
One reason may be that Bytedance sees the UK as a soft-touch on regulation.
“Bytedance has come to the recognition that the geopolitical hostility it faces in the US is insurmountable, but it retains confidence that it is welcome in other jurisdictions,” says Michael Norris, a research manager at Shanghai-based AgencyChina.
In the UK, Bytedance may be one of those regions where it can continue to operate “without the same regulatory scrutiny it faces in the US”.
A Microsoft spokesperson confirmed the talks currently did not relate to the UK business.
“This new structure would build on the experience TikTok users currently love, while adding world-class security, privacy, and digital safety protections, Nadella said. “Among other measures, Microsoft would ensure that all private data of TikTok’s American users is transferred to and remains in the United States.”
A snub for moving headquarters to London
The move to leave Britain out of the Microsoft plan may also have been a “snub” from the US for giving the green light to Bytedance to base its global headquarters in London.
TikTok has been investing heavily in the UK. Just last week, it announced a £54m fund to pay UK TikTok users to create original content for its app and prize them away from rivals YouTube and Instagram.
In recent weeks, it has been looking for a UK base of operations as its international headquarters. This could see it hire up to 3,000 staff. TikTok in the process of locating up to 30,000 square ft of office space. So far, TikTok has 800 staff in London.
On Sunday, The Sun reported the Government had now given the nod to allow TikTok’s plans in Britain to go ahead, despite pressure the app has come under from its allies, in particular the US. The Telegraph understands that an announcement on TikTok’s plans in the UK could come as soon as this week.
Ray Walsh, a digital privacy expert at ProPrivacy, said opening the door up to TikTok “seems likely to be a move designed to allow the UK to regain some of the favor it has lost with China due to the Huawei ban”.
“With Brexit looming and a lack of trade deals in place, the UK appears to be scrambling to repair relations with the Chinese, wherever possible.”
A Bytedance spokesperson said the company was “committed to being a global company”.
“In light of the current situation, ByteDance has been evaluating the possibility of establishing TikTok’s headquarters outside of the US, to better serve our global users.”
A Department for Trade spokesperson said: “Bytedance’s decision on the location of their global HQ is a commercial decision for the company. The UK is a fair and open market for investment where it supports UK growth and jobs.”
A decision on headquarters is unlikely to go unnoticed. On the back of the news that TikTok’s UK operations would not be included in a sale, some MPs questioned the signs of growing ties between China and the UK.
Bob Seely said that while it was clear “we need to continue to attract jobs to the UK, we need to be careful that China does not start playing us off against the US and other allies”.
He said there needed to be a “reset in our relationship with China that supports trade whilst building barriers to malign and covert China state influence in the UK”.
If TikTok did press on with its plans for the UK, and its US business was forced into a sale to Microsoft, or another firm, it could lead to a split in how TikTok’s data is shared. Martin Bryant, of Big Revolution, dubbed the division “splitTok”.
There are already two versions of TikTok. One is a Chinese only app, called Douyin. The other is the Western and non-Chinese app, TikTok. While separate, they have historically shared management, engineers and technical expertise, in particular Bytedance’s artificial intelligence know-how.
But this could soon see a further split if there is a new, US TikTok run by Microsoft. The other, non-US TikTok could be run out of the UK, if it relocates here, or elsewhere.
This does not necessarily mean it will be owned by Bytedance in future.
Alex Stamos, the former chief security officer at Facebook, on Monday questioned whether Bytedance may be looking at shopping out its other units. TikTok Ireland, for example, was last month named as the company which would manage data from TikTok’s EU users, and could prove a tempting prospect for new bidders.