Microsoft signed a letter of intent for TikTok deal before Trump order

  • Microsoft signed a “nonbinding letter of intent” to acquire TikTok’s US operations from parent company ByteDance on July 30, according to newly filed court documents.
  • That’s the day before news broke July 31 that President Donald Trump was planning to order ByteDance to divest its stake in TikTok’s US operations. 
  • A letter of intent is an agreement companies typically sign before they begin the due diligence phase of an acquisition. While they’re not obligated to follow through with any terms set in that agreement, such a letter signals that the talks are at an advanced stage. 
  • Microsoft declined to comment. TikTok was not immediately available for comment.
  • Visit Business Insider’s homepage for more stories.

Microsoft’s bid to acquire viral video app TikTok’s US operations got so far as signing a “nonbinding letter of intent” with Chinese parent company ByteDance — even before President Donald Trump stepped in, new court documents reveal.

A letter of intent is an agreement companies typically sign before they begin the due diligence phase of an acquisition, signalling that talks are in an advanced stage.

Specifically, court documents related to TikTok’s new lawsuit against the US government show that ByteDance signed on July 30 such an agreement with Microsoft “contemplating that, among other things, Microsoft could acquire the US TikTok business and could serve as the trusted technology partner for TikTok’s US business.” 

That letter was signed a day before news broke on July 31 that Trump was planning to order ByteDance to divest its stake in TikTok’s US operations. Soon after, reports emerged naming Microsoft as an interested suitor, followed by confirmation of talks to that effect from the company itself.

On Monday, TikTok filed its lawsuit, challenging an executive order Trump signed in early August banning “any transactions” between Americans and ByteDance, set to go into effect in mid-September. That order came after TikTok came under scrutiny from lawmakers concerned that the app and its ties to China came posted a national security threat.

In its legal filing, TikTok says that Microsoft and ByteDance had already signed a preliminary agreement by the time news broke about Trump’s plans, indicating that the possible acquisition — which would make TikTok no longer subject to the executive order and thus able to continue operations in the US — had likely been in motion for some time.

In an August 2 statement about its discussions with ByteDance, Microsoft said the companies had notified the Committee on Foreign Investment in the United States — the organization conducting the national security review of TikTok — about a “preliminary proposal” for the deal in which Microsoft would buy TikTok’s operations in the US, Canada, Australia, and New Zealand. The companies had not disclosed the timing of the notification, or that it involved a formal letter of intent, prior to Monday’s lawsuit.

Microsoft isn’t the only bidder for that slice of TikTok, either. Oracle, which has deep ties to the Trump administration, is said to be involved in preliminary discussions with several current US-based TikTok investors to purchase the US app. Oracle has yet to confirm or comment on the reports.

Microsoft declined to comment. TikTok was not immediately available for comment.

Are you a Microsoft employee with insight to share? Contact reporter Ashley Stewart via encrypted messaging app Signal (+1-425-344-8242) or email (astewart@businessinsider.com).

Are you a TikTok or ByteDance employee? Contact reporter Paige Leskin at pleskin@businessinsider.com using a non-work device. Open DMs on Twitter @paigeleskin.

Source Article