(Reuters) - Microsoft Corp is in talks to buy ByteDance-owned TikTok, the New York Times reported on Friday, citing a source.
The discussions between Microsoft and TikTok were first reported earlier on Friday by FOX Business, the Times said.
China's ByteDance later agreed to divest the U.S. operations of TikTok completely in a bid to save a deal with the White House, after President Donald Trump said on Friday he had decided to ban the popular short-video app, two people familiar with the matter said on Saturday in the US.
US officials have said TikTok under its Chinese parent poses a national risk because of the personal data it handles. ByteDance's concession will test whether Trump's threat to ban TikTok is a negotiating tactic, or whether he is intent on cracking down on a social media app that boasts it has 100 million users in the United States.
Trump told reporters onboard Air Force One late on Friday that he would issue an order for TikTok to be banned in the United States as early as Saturday. "Not the deal that you have been hearing about, that they are going to buy and sell... We are not an M&A (mergers and acquisitions) country," Trump said.
Late on Saturday, Peter Navarro, director of the White House's office of trade and manufacturing policy, told Fox News that Trump would be taking action on TikTok on Sunday or Monday.
ByteDance was previously seeking to keep a minority stake in the U.S. business of TikTok, which the White House had rejected. Under the new proposed deal, ByteDance would exit completely and Microsoft Corp would take over TikTok in the United States, the sources said.
Some ByteDance investors that are based in the United States may be given the opportunity to take minority stakes in the business, the sources added. About 70% of ByteDance's outside investors come from the United States.
"The administration has very serious national security concerns over TikTok. We continue to evaluate future policy," the White House said in a statement, declining to comment on whether Trump would accept ByteDance's concession. ByteDance in Beijing did not respond to a request for comment.
"We are here for the long run. Continue to share your voice here and let's stand for TikTok," TikTok U.S. general manager Vanessa Pappas said in a video published on the app on Saturday.
Under ByteDance's new proposal, Microsoft, which also owns professional social media network LinkedIn, will be in charge of protecting all of TikTok's U.S. user data, the sources said. The plan allows for a U.S. company other than Microsoft to take over TikTok in the United States, the sources added.
"What's the right answer? Have an American company like Microsoft take over TikTok. Win-win. Keeps competition alive and data out of the hands of the Chinese Communist Party," Republican Senator Lindsey Graham wrote on Twitter on Saturday.
Microsoft did not respond to a request for comment.
(Reporting by Munsif Vengattil in Bengaluru; Editing by Anil D'Silva)