The plan was to force the sale of the US part of the business over concerns it was a threat to national security.
Ultimately TikTok chose rival Oracle – although that deal also never happened.
In an interview with tech journalist Kara Swisher at the Code Conference, Mr Nadella admitted he was “kind of intrigued” when TikTok approached him.
TikTok was “an interesting product” and a good fit for Microsoft because it was a social, cloud-based service that used AI, he said.
The backdrop to the potential partnership was that then-President Trump had given a 15 September 2020 deadline for the Chinese-owned app to sell its US business, or be shut down.
The day before that deadline, Microsoft revealed that its offer to buy the company had been rejected.
In the end, TikTok struck a deal with Oracle and Walmart. However, after months of delays and legal challenges, Mr Trump left office, and the need for any sort of deal receded.