Blackstone discussed joining Microsoft in potential bid for TikTok

Microsoft publicly announced its intentions to purchase TikTok's US operations and possibly more of the app's business after its CEO, Satya Nadella, spoke to President Trump about the move

Microsoft's bid to buy TikTok could be aided by private equity powerhouse Blackstone Group, which has expressed interest in joining the big tech company in its possible purchase of the controversial, but popular short-video app, FOX Business has learned.

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Blackstone, one of the world's largest investment firms with nearly $600 billion in assets under management, hasn't formally decided to join Microsoft in its dealings to purchase TikTok's U.S. operations from its Chinese parent company, ByteDance, according to people with knowledge of the matter. And these people say its interest in playing a role in the purchase has waned more recently as the controversy surrounding TikTok’s future has grown.

But, these people add, Blackstone hasn’t totally given up on joining Microsoft and is still internally discussing a possible investment.

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The move by Blackstone comes as ByteDance is facing pressure from the White House to sell TikTok to a U.S. company or face the likelihood that the app will be banned in the U.S. over concerns that the Chinese government uses customer data for surveillance purposes. Last week, President Trump signed an executive order that will force ByteDance to sell TikTok in the next 45 days or face a user ban in the U.S.

Microsoft publicly announced its intentions to purchase TikTok's U.S. operations and possibly more of the app's business after its chief executive, Satya Nadella, spoke to Trump about the move. Trump said he would accept a deal as long as the company could guarantee no Chinese involvement and that U.S. user data would be secured.

TickerSecurityLastChangeChange %
BXBLACKSTONE GROUP50.78-0.50-0.97%
MSFTMICROSOFT CORP.200.59-6.83-3.29%

The president also initially said Microsoft would have to pay the U.S. government a fee for arranging the purchase, though language about the payment was not included in his executive order.

Since the company's Aug. 2 announcement on the possible deal, Microsoft, along with ByteDance’s outside investors such as General Atlantic Partners and Sequoia Capital, has been weighing various investment strategies and partners for a deal, if it does come together, these people say.

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Under one scenario, General Atlantic and Sequoia could remain in the investing group, these people add. Blackstone is said to have shown significant interest in joining Microsoft in the bid during the early conversations the tech giant had with ByteDance weeks ago, these people say.

Since then, Blackstone has not been part of Microsoft’s deal deliberations, having backed away amid the controversy and over concerns that a deal to buy mainly TikTok's U.S. operations would face stiff competition since ByteDance would continue to operate TikTok on a global basis, these people add.

But people with knowledge of the matter say Blackstone has not totally given up being part of the Microsoft investing group, even if it’s unclear if Microsoft would want its involvement. Microsoft is considered the leading candidate to purchase TikTok given its strong balance sheet and because it could likely pass regulatory scrutiny since it’s a smallish player in social media.

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Press officials for Blackstone had no comment. Press officials for Sequoia and Microsoft didn’t return a call for comment. A spokesman for TikTok declined to comment as did a spokeswoman for General Atlantic.

Despite Microsoft's stated intentions, its purchase of TikTok is not guaranteed, people with knowledge of the matter tell FOX Business. These people say the tech giant could ultimately walk away from what has been a difficult transaction that will face massive scrutiny from the U.S. government and entail a significant investment in addition to the purchase price.

Microsoft would have to secure TikTok's user data to gain approval from the Trump administration to complete the purchase.

Other tech firms that have expressed interest in TikTok, as previously reported by FOX Business, include Facebook and Google, but both would face headwinds from antitrust regulators. Reports surfaced over the weekend that Twitter has held preliminary talks about a purchase of TikTok, but it doesn't have the scale to purchase the video-sharing mobile app on its own and would need outside financing.

TickerSecurityLastChangeChange %
TWTRTWITTER INC.45.33+2.60+6.08%
FBFACEBOOK INC.249.02-5.73-2.25%
GOOGLALPHABET INC.1,409.39-50.43-3.45%

By some estimates, TikTok's U.S. operations could fetch around $50 billion, while Twitter has a market cap of $29 billion and has just around $ 8 billion in cash and cash equivalents on its balance sheet. By contrast, Microsoft has around $136 billion in funding available for the purchase and a market cap of $1.6 trillion.

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TikTok boasts 800 million monthly active users globally, though it says it has as many as 100 million monthly active users in the U.S., which is why it's appealing to a company like Microsoft that is looking to gain traction in the fast-growing social media space. Microsoft is best known for its computer and cloud computing businesses but has just a small presence in social media largely through its ownership of LinkedIn, an online service for employment networking.

Some social media experts say TikTok could soon reach a broader audience as it morphs into a news feed and a place where sports franchises can post short videos.