Microsoft faces complex challenges in TikTok carve-out

Microsoft Corporation’s bid to carve out parts of TikTok from its Chinese owner ByteDance will be a technically complex endeavour that could test the patience of President Donald Trump's administration, according to sources familiar with the set-up.

Trump has given Microsoft until September 15 to put together a blueprint for an acquisition that safeguards the personal data of Americans stored on the short-video app.

He also issued an order to ban it if there is no deal by then. Microsoft is negotiating a transition period that will give it time to ring-fence TikTok technologically from ByteDance after they agree to a deal, Reuters reported early this month.

The clean break that Trump and lawmakers envision could take a year or more, some of the sources said.

TikTok is functionally and technically similar to ByteDance-owned Douyin, which is available only in China, and shares technical resources with it and other ByteDance-owned properties.

ByteDance started working on their technological separation several months ago amid scrutiny from the US government, a source familiar with the process said. It began planning for a split as part of a strategy to shift its power from China.

While the code for the app, which determines the look and feel of TikTok, has been separated from Douyin, the server code is still partially shared across other ByteDance products. The server code provides basic functionality of the apps such as data storage, algorithms for moderating and recommending content and management of user profiles.

To ensure uninterrupted TikTok service, Microsoft would likely need to rely on ByteDance’s code while it reviews and revises the code, and moves to a new back-end infrastructure to serve users according to cyber security expert Ryan Speers.

Another challenge Microsoft faces is how it will transfer TikTok's secret sauce. TikTok uses recommendation algorithms that are independent from Douyin, but what makes it tick is the content and user information that is fed into the algorithm.

"Algorithms are not worth anything without the data," said Jim DuBois, a former chief information officer at Microsoft. DuBois is a venture adviser at Ignition Partners.

Microsoft's negotiations for the acquisition of the US, Canada, New Zealand and Australia operations of TikTok complicates a separation.