Trump doesn't mind Microsoft buying TikTok

At the White House on Monday, President Trump opened the doors to the possibility of Microsoft acquiring TikTok, after previously threatening to ban the social media app. Former Disney Senior Analyst and dot.LA Chief Correspondent Kelly O'Grady joins Yahoo Finance’s Zack Guzman to discuss.

Video transcript

ZACK GUZMAN: Welcome back to live market coverage here on "The Ticker." Some interesting updates in the social-media saga surrounding the Chinese-owned social-media company-- short-form-video company, I should say, TikTok, after President Trump had mentioned he might threaten to shut that entity down. Again, dealing with national-- dealing with national-security threats around user data there and kind of stepping back from that opinion here after we got reports that he might give Microsoft, a company that did confirm their interest in acquiring TikTok-- at least perhaps the US businesses of TikTok here.

And President Trump saying he would give Microsoft about 45 days to lock up that acquisition. Again, questions around whether or not that would be something that politicians in general would get behind. We did get the update from Senate Minority Leader Chuck Schumer weighing in on this on Twitter, saying, quote, "A US company should buy TikTok so everyone can keep using it and your data is safe. This is about privacy. With TikTok in China, it's subject to Chinese Communist Party laws that may require handing over data to their government. A safe way must be found for TikTok to continue." Potentially that safe way would be Microsoft.

And for more on this, I want to bring on our next guest, someone who worked with Kevin Mayer, the CEO of TikTok, back when they both worked at Disney. For more on her thoughts here, let's bring in Kelly O'Grady, dot.LA Chief Correspondent and former Disney Senior Analyst Corporate Strategy and Business Development.

Kelly, I mean, you know Kevin well here, and you know what he's dealing with. Kind of interesting to see him come out and kind of bash Facebook back when there were those antitrust talks going on last week. The story this week, though, apparently politicians on board with a big tech firm in Microsoft coming in and taking TikTok. So what's your take on how all this is shaking out right now?

KELLY O'GRADY: Yeah, well, it's quite the soap opera. I felt like there were just updates every moment over the weekend. I think this is really interesting.

You know, you're seeing a lot of backlash in China this morning against ByteDance of a potentially US sale of their investment on TikTok, and I think that that's causing a lot of concern around some of the other Chinese tech companies that play in the United States that this could cause a ripple effect.

A couple of other things-- I mean, Microsoft getting into this space is really interesting. All of a sudden, you would have them have a seat at the table. They weren't one of the folks that were at the big tech hearings this week, but they're certainly-- or last week-- but they're certainly a tech titan, and owning TikTok all of a sudden really gives them the opportunity to play in the quickly evolving social-media-video space and gives them access to the next generation of Americans that don't necessarily engage with Microsoft products right now.

ZACK GUZMAN: Yeah, and when we think about, you know, the timeline here, 45 days might seem like a long time, especially this year when things are a little bit different. But when we think about getting a deal through-- I mean, President Trump saying TikTok would be out of business in the US if the deal's not done by September 15, according to reports here. So, I mean, what do you think that might do to either, A, the valuation that might be assigned to the US business for TikTok and then also whether or not Microsoft can move so swiftly to get something like that done?

KELLY O'GRADY: Yeah, absolutely. When I worked with Kevin, it always felt like you were-- you were moving extremely rapidly when we were working on M&A deals. So if anyone could get this done, it's definitely him.

But I think there's a couple of things to consider. The fact that there's a time deadline is definitely going to impact the price. On the one hand, you have ByteDance needing to divest their US stake in TikTok, but you also have Microsoft, you know, wanting to get into this quickly evolving space. And so, you know, I do think that this could potentially drive down the price.

It also begs the question, how do you even value the US, Canada, New Zealand, Australia operation? Kind of a weird mix of folks. You would have expected to see UK in there with the Five Eyes alliance. But I think that, you know, you could think of it two ways, right? I guess 10% of US users-- or 10% of TikTok users come from the US. So the $50 billion valuation that was thrown out recently by investors, does that mean it goes for $5 billion?

Or you could look at it another way. You know, TikTok US operations account for double the revenue what you see across all of their other properties worldwide. So are you going to see something higher than that?

But at the end of the day, the fact that the government is getting involved and putting a deadline on this, that's always tough when you are involved in that M&A deal, and it put a lot of extra pressure on an already tenuous situation.

ZACK GUZMAN: Yeah. Interesting, though, to see it kind of being a bipartisan thing when we think about the security concerns of a Chinese-backed tech company here. We've seen this before. You can think about the parent company of Grindr being forced to divest because of national-security concerns and user data on that front. The Committee on Foreign Investment in the US, CFIUS, We don't talk about it much but always kind of, at least on this front, it seems like being consistently seen raising the issue about Chinese-owned tech companies.