TikTok is at the heart of a wild geopolitical dogfight and it could result in Microsoft buying TikTok. Here's what's going on.

TikTok is outperforming Instagram in terms of downloads, and its short-form video clips regularly go viral on rival social networks.

The Committee on Foreign Investment in the United States in late 2019 contacted ByteDance expressing concerns that TikTok posed a threat to US citizens.

In December 2019, the US Army banned personnel from using TikTok. The Navy also told personnel not to install the app on government devices.

When asked by Fox News about a potential ban on July 6, Secretary of State Mike Pompeo said: "We are taking this very seriously and we are certainly looking at it."

He added that US TikTok users should be wary of the app, saying their data could end up "in the hands of the Chinese Communist Party."

When asked about Pompeo's comments in an interview broadcast Tuesday, July 7, Trump said: "It's something we're looking at."

Trump's reasoning for potentially banning TikTok differed from Pompeo's. Rather than citing national security concerns, Trump suggesting a TikTok ban could be deployed to punish China for the outbreak of the coronavirus.

"Look, what happened with China with this virus, what they've done to this country and to the entire world is disgraceful," Trump said, adding that banning TikTok was "one of many" options he was considering as a way to punish China.

The New York Times first reported TikTok was in talks to sell its US business to Microsoft and other US companies because Trump was considering taking action against the company.

According to the Times' sources, the governmental Committee on Foreign Investment in the United States (CFIUS) ordered TikTok's parent company ByteDance to divest the company on national security grounds.

"As far as TikTok is concerned we're banning them from the United States," Trump said, adding that he planned to take action "as soon as Saturday."

It is not clear whether Trump has the authority to ban the app, although he asserted he could do so "with an executive order or that."

In a video by TikTok's US general manager Vanessa Pappas addressed to its US users, she said "we're not planning on going anywhere" and "we're here for the long run."

She said that TikTok is planning on creating 10,000 jobs in the US over the next three years. 

Talking to Fox News, Pompeo said Chinese software companies including TikTok "are feeding data directly to the Chinese Communist Party, their national security apparatus."

"President Trump has said 'enough' and we're going fix it, and so he will take action in the coming days with respect to a broad array of national security risks," said Pompeo.

Citing people familiar with the matter, the Journal said the talks between Microsoft and ByteDance hit a speed bump following Trump's comments on Air Force One. One source said the comments caught both TikTok and Microsoft completely by surprise, while another said the Trump administration had been intimately involved in discussions between the two companies for weeks.

"Following a conversation between Microsoft CEO Satya Nadella and President Donald J. Trump, Microsoft is prepared to continue discussions to explore a purchase of TikTok in the United States," the company said in a blog post.

Microsoft's blog also said the company is looking to buy up not only TikTok's US business but also in Canada, Australia, and New Zealand.

"Microsoft will move quickly to pursue discussions with TikTok's parent company, ByteDance, in a matter of weeks, and in any event completing these discussions no later than September 15, 2020. During this process, Microsoft looks forward to continuing dialogue with the United States Government, including with the President," it said.

Any potential acquisition will be overseen by the Committee on Foreign Investment in the United States (CFIUS).

Microsoft's announcement doesn't explicitly state what a new, Microsoft-owned TikTok across the US, Canada, Australia, and New Zealand might look like. The idea of another hived-off TikTok app that operates only in these markets under Microsoft seems drastic.

One part of the announcement suggests a deal would focus on who owns the data of TikTok users in these markets and where it's stored. As Microsoft wrote: "This new structure would build on the experience TikTok users currently love, while adding world-class security, privacy, and digital safety protections. The operating model for the service would be built to ensure transparency to users as well as appropriate security oversight by governments in these countries."

But it isn't clear how this might impact TikTok in other major markets such as, for example, Europe.

Three sources familiar with the matter told Reuters Trump only gave Microsoft the go-ahead for its acquisition talks with TikTok on condition that it closes the deal in 45 days.

According to Reuters' sources, Trump softened his stance on TikTok following pressure from his advisers and other Republican party members, who said banning TikTok would trigger a wave of legal challenge as well as alienating young voters ahead of November's presidential election.

US officials have had talks with at least one other large company apart from Microsoft about potentially acquiring TikTok, a source familiar with the talks told Bloomberg. The source did not say which large company this was.

The South China Morning Post reported Sunday that ByteDance's founder Zhang Yiming as well as its investors are reluctant to sell TikTok, citing a source familiar with the matter.

His preference is instead for a spinoff that would enable TikTok to operate independently, and in the US.

Microsoft's interest in TikTok was seen by analysts as a departure from its typically enterprise-based business model.

"It's a little bit out of left field, but for Microsoft, the one area where they missed the boat was social media," Wedbush Securities analyst Dan Ives told Business Insider.

Futurum Research analyst Daniel Newman said an acquisition could position Microsoft as a savior for TikTok's predominantly young user base. "The rising generations are very attached to this platform [...] Microsoft has the opportunity to be the hero here," Newman said.