TikTok CEO quits as company reportedly plans sale to Microsoft, Walmart
Can’t do global work if the White House is forcing sale of US business, Mayer said.
KATE COX - 8/27/2020,
Enlarge / TikTok's US operations may soon be part of every cool teen's favorite conglomerates, Microsoft and Walmart.
TikTok CEO Kevin Mayer, who only began the job on June 1, is heading right back out the door again as the company plans a sale under pressure from the White House.
"In recent weeks, as the political environment has sharply changed, I have done significant reflection on what the corporate structural changes will require, and what it means for the global role I signed up for," Mayer wrote in an email to TikTok employees late Wednesday. "Against this backdrop, and as we expect to reach a resolution very soon, it is with a heavy heart that I wanted to let you all know that I have decided to leave the company."
Mayer praised employees' efforts, saying that "there is no doubt that the future [of TikTok] is incredibly bright." But at the same time, he added, "I understand that the role that I signed up for—including running TikTok globally—will look very different as a result of the US Administration’s action to push for a sell off of the US business."
Until this spring, Mayer was one of Disney's top executives, where he successfully headed the launch of the Disney+ streaming service. In February, however, he was unexpectedly passed over to succeed outgoing Disney CEO Bob Iger in favor of Bob Chapek. Three months later he announced he was jumping ship to TikTok, in a move that spawned dozens of stories about TikTok's meteoric growth and its potential to make it big as a force in media.
TikTok, in its official statement on Mayer's departure, said, "We appreciate that the political dynamics of the last few months have significantly changed what the scope of Kevin’s role would be going forward, and fully respect his decision."
Not the job he signed up for
Even as TikTok's popularity has skyrocketed amid the 2020 pandemic, though, the company itself has been struggling against the Trump administration. Earlier this month, the White House declared the existence of TikTok—along with another Chinese app, WeChat—to be a national emergency and issued an executive order that would effectively ban it from operating inside the United States.
TikTok has repeatedly denied the administration's allegations that it shares US user data with China, and it filed suit on Monday alleging that the orders are unconstitutional and politically driven by an "anti-China political campaign" ahead of the November election.
TikTok chief Kevin Mayer launches stinging attack on Facebook
President Donald Trump on August 3 issued a personal ultimatum, telling TikTok it had until September 15 to sell to a US buyer if it wanted to keep operating inside the United States. Microsoft at the time publicly confirmed it was considering a way to purchase TikTok's US assets and has been considered the leading contender for an acquisition since.
Today, however, Walmart unexpectedly announced that it has joined forces with Microsoft to go in together on the deal.
Walmart wants TikTok for its potential to integrate e-commerce and advertising, the company said. "We believe a potential relationship with Tik Tok US in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses."
Walmart added, "We are confident that a Walmart and Microsoft partnership would meet both the expectations of US Tik Tok users while satisfying the concerns of US government regulators."
Sources told CNBC that TikTok is expected to announce a sale "as soon as next week," ahead of Trump's September 15 deadline and that the transaction is expected to be valued at between $20 billion and $30 billion.
TikTok sues Trump admin., says ban is unconstitutional and political
App accuses Trump of banning it in order to drum up anti-China sentiment for election.
KATE COX - 8/24/2020, 2:42 PM
Enlarge / TikTok's US operations may soon be part of every cool teen's favorite conglomerates, Microsoft and Walmart.
TikTok and its parent company, ByteDance, filed suit today in federal court arguing that President Donald Trump's efforts to ban the app or force a sale to a US firm are not grounded in facts but instead are part of an "anti-China political campaign."
An executive order curtailing TikTok's US operations "is not rooted in bona fide national security concerns," TikTok argues in its complaint (PDF). "Independent national security and information security experts have criticized the political nature of this executive order, and expressed doubt as to whether its stated national security objective is genuine," the company adds.
TikTok's complaint seeks to prevent the president and the Department of Commerce from "impermissively banning" the app, alleging that the authority under which the order was enacted (the International Emergency Economic Powers Act, or IEEPA) was a "gross misappropriation" and "a pretext for furthering the President's broader campaign of anti-China rhetoric in the run-up to the US election."
The complaint goes on:
Past presidents have used this power responsibly to protect the country from genuine threats from abroad ... Through this executive order, however, President Trump seeks to use IEEPA against TikTok Inc., a US company—headquartered in Los Angeles with hundreds of employees the United States—to destroy an online community where millions of Americans have come together to express themselves, share video content, and make connections with each other. The order imposes these restrictions despite express limitations in IEEPA barring executive actions from restricting personal communications or the transmission of informational materials.
The White House earlier this month officially declared the existence of TikTok—along with another Chinese app, WeChat—to be a national emergency, and issued an executive order prohibiting anyone from making "transactions" with it and effectively ending its ability to operate inside the United States. The order alleged that TikTok's data collection practices, "threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information—potentially allowing China to track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage."
TikTok has vehemently and repeatedly denied the allegations, arguing that its US customer data is handled on servers based in the United States and Singapore and kept separate from the data collected by ByteDance's other products in China.
The fight goes on
The idea that TikTok might present a threat to national security was first publicly floated in October, when Sen. Tom Cotton (R-Ark.) and Sen. Chuck Schumer (D-N.Y.) asked the Director of National Intelligence to launch a probe. Reports then surfaced in November that TikTok was indeed facing review by the Committee on Foreign Investment in the United States, or CFIUS, which evaluates transactions in which an international business acquires part or all of a US business for national security concerns.
Trump declares TikTok, WeChat “national emergency,” preps bans
TikTok's competition also may have dropped a bug in the administration's ear last fall, The Wall Street Journal reported late yesterday, as Facebook CEO Mark Zuckerberg reportedly pushed the administration toward investigating TikTok around that time.
Sources told the WSJ that at a dinner in October, Zuckerberg told Trump specifically that the rise of Chinese firms can harm American businesses. Zuckerberg also discussed TikTok in meetings last fall with several sitting senators, the WSJ reports.
The administration publicly floated the idea of banning TikTok and other China-based social media apps outright in early July. Secretary of State Mike Pompeo told Fox News in an interview that a ban was "something we're looking at." Pompeo in the interview framed a potential ban as being in line with the administration's actions against other Chinese tech firms, such as Huawei and ZTE.
Trump on August 3 personally issued an ultimatum telling TikTok it had until September 15 to sell to a US buyer if it wanted to keep operating inside the United States. Microsoft at the time publicly confirmed it was considering a way to purchase TikTok's US assets. Trump at the time said: "We set a date, I set a date, of around September 15th, at which point it's going to be out of business in the United States. But if somebody, whether it’s Microsoft or somebody else, buys it, that'll be interesting." Since then, Oracle has also reportedly thrown its hat in the ring.
The administration's formal move to ban TikTok came only three days later, seemingly launched as part of the administration's "Clean Network," initiative, a set of goals to keep Chinese firms far away from US consumers, networks, and technologies
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