Uncertainty surrounds the future of Chinese-owned social video app TikTok today following an 11th-hour bid by Microsoft Corp. to acquire the company’s U.S. arm ahead of a possible ban on the app from the Trump administration.

Reports that TikTok could be sold to U.S. investors first emerged July 23 before a possible ban, with Microsoft coming to the party late in the week. President Trump then told reporters on Friday that he intended to ban TikTok through executive action “soon” but as of this evening, that has yet to occur.

The hold on any potential TikTok ban in the U.S. is directly linked to Microsoft’s bid. Microsoft said Sunday that Chief Executive Officer Satya Nadella had discussed the matter with Trump and it was prepared to continue discussions to explore a purchase of TikTok in the U.S.

“Microsoft fully appreciates the importance of addressing the President’s concerns,” Microsoft said. “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.”

Those concerns primarily relate to accusations that the app is being used to spy on behalf of the Chinese government. TikTok’s parent company Bytedance denies spying on behalf of the Chinese government and has established a separate arm in the U.S. to placate critics but with little success in terms of stopping criticism.

ByteDance’s willingness to divest some or all of its U.S. operations in an attempt to stop TikTok being banned appears to be accurate, as Reuters reported Saturday that the company was now willing to sell off its U.S. operations after previously hoping to maintain a minority stake.

Whether a deal with Microsoft will go ahead is another matter. The South China Morning Post reported Saturday that ByteDance would prefer an independent spinoff over a sale to Microsoft. Referencing a source who has been briefed on the discussions, the report said ByteDance founder Zhang Yiming is reluctant to sell to Microsoft.

“Except for Zhang Yiming, almost all those in the room favor such a spinoff,” the source told SCMP. “The mood is kind of: ‘the founder will be out and the house will be ours’… but even for Zhang himself, there’s really no other option because the app will be killed if you don’t let it go.”

The same source added that the newly independent TikTok would operate in all overseas markets in the hope of avoiding further problems. The app has already been banned in India and is currently under investigation in Australia.

Any potential deal may be academic depending on which way Trump jumps. At the very least, with the proposed deal said to have been on the president’s desk since Saturday, any decision on banning the app could possibly be held off for the time being pending further development of the Microsoft deal.

“This deal would be a win-win for consumers and Microsoft. Consumers would still get the massively popular product they’ve come to love, while benefiting from the security and privacy improvements that Microsoft can deliver as a global leader in these areas,” said Daniel Elman, an analyst with Nucleus Research.

Moreover, he said, “This could foreshadow a growing wave of U.S. company acquisition of Chinese internet properties, particularly if the geopolitical tensions continue to mount. If the government bans China-based companies or applications from working in the U.S., they would be forced to lose out on the critical U.S. consumer market or sell to a U.S. entity to alleviate the security concerns.”

Still, whether Microsoft can make something of TikTok, whose advertising business is nascent, remains in doubt.

“As a potential acquirer, Microsoft is a head-scratcher,” said eMarketer principal analyst Debra Aho Williamson. “Though it’s been active in the consumer internet acquisition space for some time, with Minecraft and Mixer, for example, TikTok is a very different type of company. Then again, Microsoft once tried to acquire Facebook. Getting TikTok would give it another chance to get in on a fast growing, youth-oriented social media property and be a way to try to get back at Facebook for spurning its advances.”

With reporting from Robert Hof

Photo: Aaron Yoo/Flickr