"The Strangest Thing I've Ever Worked On," Microsoft CEO Opens Up about Failed TikTok Deal

Last August, ByteDance was given but a few weeks to find a domestic buyer for TikTok's U.S. operations by the Trump administration.

If talks failed after the September deadline, TikTok would've been ousted from U.S. app stores.

Like Penelope's suitors in The Odyssey, company after company lined up to pitch offers for TikTok.

Enter Microsoft (NASDAQ: MSFT), who entered talks with the social media behemoth in August, only to have those talks go sideways by September when ByteDance chose Oracle (NYSE: ORCL) as its trusted US technology partner.

And then, nothing.

"The strangest thing I've ever worked on," said Microsoft CEO Satya Nadella of the talks, to crowds at the recent Code Conference in Beverly Hills.

"It's unbelievable," he began. "First of all, TikTok came to us. We didn't go to TikTok."

At the time, Nadella thought TikTok would be well placed in Microsoft's eco-system given that it's cloud-based, social, and leverages AI, all areas of expertise for the company, he said.

"It's an interesting product," he added.

Nadella also contended that his company's content moderation credentials, established through LinkedIn and the operation of its Xbox gaming services, also made Microsoft a good match.

ByteDance, said Nadella, initially came to Microsoft because it wanted a U.S. partner to help with "these security things we've been hearing about." Sealing a deal with Microsoft would've gone a long way to address "these security things," particularly in the eyes of the Trump administration.

After all the impetus behind the Trump ban had been the potential leaking by TikTok of sensitive data to hostile foreign powers, namely China, where the app's parent company is based. Meanwhile, Microsoft is a U.S.-based cloud-computing juggernaut with more than enough infrastructure to keep TikTok's data safe and sound on U.S. shores.

Although, as mentioned, the deal was ultimately awarded to Oracle. But "at this point, it's all moot, right?" said Nadella on the outcome of the talks.

"There was a period of time when I thought the [U.S. government] had a particular set of requirements, [but] it just disappeared," said the Microsoft CEO. "President Trump, I think, had a particular point of view of what he was trying to get done ...and then just dropped off."

As for Oracle, September came and went after Trump's ban failed under the weight of court challenges. Then Trump left office, and so to did the energy behind his divestment drive.

In June, the Biden Commerce Department formally withdrew Trump's initial executive order to block downloads of TikTok.

And thus, the Oracle-ByteDance Deal is dead.

As for Microsoft, Nadella said the company remains well-positioned as a potential partner for TikTok, adding that the company has the cloud capabilities, the security expertise, and "the engineers to be able to take over a codebase."

Ultimately, he stopped short of saying he'd buy TikTok if the offer ever came up again.

"At this point, I'm happy with what aIl have," he said.