Yahoo Finance's Tech Editor Dan Howley joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss President Donald Trump's take on Microsoft's potential purchase of TikTok's U.S. operations.
ALEXIS CHRISTOFOROUS: Busy morning. Now we have news regarding China, which is promising to retaliate against the US if Microsoft seals a deal to buy the popular Chinese video app TikTok. Chinese state media called the US a rogue country and labeled the potential buyout theft. The increased tensions between the US and China putting some pressure on stock futures.
This morning, we have Dow futures in the red now by about 55 points. Dow futures were off more than 100 earlier we should note. NASDAQ futures down about 45 and S&P futures giving up 13 points. Now President Trump weighed in on the potential buyout, saying during a press conference yesterday that he would sign off on the deal but only if the US receives, quote, a lot of money in exchange.
PRESIDENT TRUMP: I think we're going to have-- maybe a deal is going to be made. It's a great asset. It's a great asset. But it's not a great asset in the United States unless they have the approval of the United States. So it will close down on September 15, unless Microsoft or somebody else is able to buy it and work out a deal, an appropriate deal, so the Treasury of the-- really the Treasury I guess you would say of the United States gets a lot of money, a lot of money.
ALEXIS CHRISTOFOROUS: Now President Trump also said whichever company winds up buying TikTok, it's probably easier to buy the whole thing instead of buying about 30% which is what Microsoft is looking to do right now. Lots to get into here with Yahoo Finance's Tech Editor, Dan Howley. Dan, good morning. In many ways, this is an unprecedented situation, right?
Especially, I mean is now the US trying to broker a deal and get some money in the process? What would this-- what would the ramifications be for other large corporations Dan?
DAN HOWLEY: Yeah, it's very strange that President Trump made this statement that the Treasury would want to take a bite out of any kind of deal between Microsoft and ByteDance to get TikTok under Microsoft. And, you know, the rhetoric coming out of China obviously basically saying that the US is trying to steal the company from them.
But from TikTok's perspective, you know, obviously ByteDance would want to hold onto it. But TikTok itself hasn't made any kind of signals that they're upset really with a potential deal with Microsoft. Clearly they want to continue to operate on their own. But they also seem to be OK with the idea of continuing to operate as long as they're allowed to.
But as far as the actual deal goes, Microsoft, or any suitor, would have until September 15 to close the deal, and then President Trump would start to ban the app nationwide. We're not sure how exactly that would look. Maybe it would be telling the different app stores to close down. Maybe it would be a way for the US to I guess just ensure that TikTok doesn't operate or doesn't allow connections to the US.
That kind of feels like it's going to be difficult to do, unless the app is actually banned from Google or Apple's stores. But there are third party app stores that people can still download apps to on Android. So it could continue to operate there. We really don't know how the US would do this. But obviously it's something that the president and lawmakers on both sides of the aisle want to do.
And security researchers have also said that there's a potential for this kind of data to be abused in the future. But, you know, some hackers have gone through the actual code that runs TikTok and said, look, they're not pulling out any data from people that you don't find on social media sites like Facebook or Twitter. It's basically, you know, location data, device data, operating system data, things along those lines but nothing more.
ALEXIS CHRISTOFOROUS: Dan, what happens to Microsoft here? I mean, they do business in China right now. The Chinese are already saying they would retaliate if this deal were to go through. What does this mean do you think for the future of, yes, Microsoft in China but also just big tech in China?
DAN HOWLEY: I don't think it really hurts Microsoft's standing. I think, you know, this is basically the US saying this app lives or dies by getting a US company to run it or oversee it, I guess. For Microsoft, it's important, you know, they need some young blood into-- in their consumer ranks. I mean, look, they had the Xbox brand, yes. But a lot of their money still comes from the cloud, obviously, and then their productivity apps.
They still have Windows OEM, Windows Commercial, surface line and Xbox. But a lot of people, you know, look at young kids today, their schools are using Google's Chromebooks. They use Google Gmail. They use Google drives. They don't necessarily need Microsoft. They also use iPhones and iPads as their primary way of computing. So they could avoid Microsoft their whole lives if they're not gamers.
And that's something that Microsoft has to take into account. And it would make sense then for-- then for Microsoft to want to get something like TikTok to ensure that young people still have Microsoft on their mind.