White House trade adviser Peter Navarro suggested if Microsoft Corp were to buy TikTok, it could divest its holdings in China.
“So the question is, is Microsoft going to be compromised?” asked Navarro in an interview with CNN. “Maybe Microsoft could divest its Chinese holdings?”
U.S. President Donald Trump has agreed to give ByteDance TikTok’s owner 45 days to negotiate a sale to Microsoft, said three sources familiar with the matter at hand.
U.S. officials have highlighted national security risks posed by TikTok given the huge trove of personal data that it handles. On Friday, Trump had said he plans on banning TikTok in the United States after dismissing the idea of a sale to Microsoft.
During an interview with Fox News Channel, Navarro stated, any potential buyer of TikTok that has operations in China could be a problem. Citing Microsoft’s Bing search engine and Skype platform, Navarro said, they “effectively are enablers of Chinese censorship, surveillance and monitoring.”
Microsoft has more than 6,000 employees in China and offices in Beijing, Suzhou and Shanghai.
Although Microsoft has been doing business in China for decades, business from China accounts for just over 1% of the company’s revenue, said report from Bloomberg citing Microsoft President and Chief Legal Officer Brad Smith as saying in a conference in January.
Widespread piracy of Microsoft’s Windows operating system and Office suite, its cash cow, prevent the company from making sales in China. It is now pushing its Azure cloud service to customers in China, via a partnership with local data service provider 21Vianet.
Microsoft’s crown jewel is arguably a research center in Beijing, which has produced a number of alumni who have gone on to executive positions at Alibaba, ByteDance, Xiaomi, and facial recognition unicorns Sensetime and Megvii.