Microsoft is facing multiple technical issues in TikTok carve-out

Sources say that Microsoft's attempt to extract parts of TikTok from its parent ByteDance is a technically complex attempt that could test the patience of President Donald Trump's administration. 

Trump gave Microsoft until September 15 to prepare a roadmap for the acquisition to protect the personal data of Americans stored in the short-video app, and has since issued an order banning it. Microsoft is in talks for a change period, which will technically give it time to ring the ticket from ByteDance after agreeing to a deal.

Some sources say the amendment made by Trump and his lawyers could take one or more years. TikTik is functionally and technically similar to ByteDance-owned Doyen, which is only available in China and shares technical resources and other ByteDance-owned features known to the public.

Bytes began working on its technical partition several months ago during an investigation by the U.S. government. It began planning the split as part of a strategy to transfer its power from China.

Source says that the server code is still partially shared with other byte dance products. Server code provides basic functionality for applications such as data storage, moderating algorithms and recommending content and managing user profiles.

Ryan Spears, a cybersecurity expert at River Loop Security, said that in order to ensure uninterrupted TikTok service, Microsoft needs to rely on byteDance code to serve its customers, which will review the code and use the new back-end infrastructure.

Aymen Mir, former deputy secretary of the Treasury, who is in charge of the CFIUS, said that any technical or operational reliance of US business on a Chinese company after the sale was generally unacceptable to the Foreign Investment Commission (CFIUS).

Previously, CFIUS needed to adopt better defense pending sales in which it was possible to distinguish American sellers from foreign sellers, he said.

Another challenge facing Microsoft is how it looks like TikTok’s secret sauce, the recommended engine that keeps users glued to their screens. This engine, or algorithm, powers TikTok’s “for you” page, which suggests watching the next video based on an analysis of user behavior.

According to two sources familiar with the case, TikTok uses recommendation algorithms that are independent of Doine. But it does tick the content and user information provided to the algorithm.

Tiktok says its user data is in the US, separated from the rest of the company with backups in Singapore.

Karen C., Wenbull LLP’s Bargaining Counsel. Harman said the proposed timeline makes a deal very challenging, “It can sometimes take months and months to determine the business needs of a segmented business, IPs and other assets, and assets and IPs, among others.”

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