Nadella talks in detail on the failed TikTok deal last year at Code Conference


When former US President Donald Trump threatened to ban TikTok in the U.S. due to privacy and security concerns, Microsoft was the frontrunner to buy the company.

The company 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.

If the deal would have gone through, TikTok would have served Microsoft in a critical social media space where it is currently lacking a significant presence. However, Microsoft couldn’t make the deal happen.

On Monday night, September 27, at the Code Conference event, Microsoft CEO Satya Nadella offered new details about the company’s unsuccessful attempt to acquire TikTok a year ago.

“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.

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 has reached 1 billion users monthly.

On the reason for buying 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.”