The bidding to buy TikTok’s U.S. operations took an unexpected turn over the weekend.
While Microsoft Corp. is still seen as front-runner, The Wall Street Journal (WSJ) reported Twitter has held preliminary talks with the popular Chinese app that allows users to craft and post short videos to combine the two mega social media platforms.
Citing data and national security issues, President Donald Trump issued two executive orders last week banning TikTok and WeChat from the U.S. The ban is scheduled to start on Sept. 15.
For weeks, Microsoft has been working to close the deal before that date.
There are several questions about whether Twitter can merge with TikTok. It’s unclear how much TikTok’s U.S. operations are worth. But with a market capitalization of about $29 billion, Twitter pales in comparison to Microsoft’s more than $1.6 trillion. If Twitter was to do a deal, it’s clear the company would need some financial backing, WSJ reported.
In addition, unlike Microsoft, Twitter doesn’t operate in China. China has blocked access to Twitter.
Twitter has made the case that it would have a better chance over questions over antitrust since it is smaller than Microsoft or other potential bidders, WSJ reported.
While Twitter has been profitable over the last few years, the San Francisco-based company reported a more than $1 billion loss in the second quarter, WSJ reported. Microsoft reported more than $136 billion in cash and short-term investments as of June, compared with Twitter’s reported $7.8 billion.
Trump has alleged the app could be used to send American users’ data to the communist Chinese government. U.S. officials have also said they worry that TikTok could distribute propaganda and censor communications.
In response, TikTok said it was “shocked” by the president’s action without due process.
“Microsoft fully appreciates the importance of addressing the president’s concerns,” the Redmond, Washington-based tech giant said in its blog. “It is committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.”