US to Ban TikTok: ByteDance Need to Sell TikTok’s U.S. Operations to an American Company
Donald
Trump’s trade war with China has forced ByteDance's TikTok, to pursue a
sale of its US business after the president signed an executive order
last week that could shut it down on 15 September.
Separating the parts of TikTok; Microsoft is aiming to buy from the social media platform and its Beijing-based parent company ByteDance could take up to a year or more, well past a September 15 deadline set by White House. The arguements came from White House officials saying that TikTok poses a national security risk, claiming personal user data could be shared with the Chinese state government.
So far, Twitter and Microsoft are the only reported bidders for Bytedance’s business, but others could emerge. And there’s the potential that any sale could be scuttled by lawsuits challenging the President’s executive order.
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| Source: Sensor Tower |
The US software company Microsoft said on Sunday it was in negotiations with ByteDance, to explore “a purchase of the TikTok service in the United States, Canada, Australia, and New Zealand”. But Microsoft has since also pursued a plan that would include all countries where TikTok operates. A deal could be worth between $10 billion and $30 billion, according to CNBC. The large price range may reflect the different proposed deal structures.
When asked about whether he was wary about Microsoft entering the social media space,
Gates responded, “I mean, this may sound self-serving, but I think that
the game being more competitive is probably a good thing. But having
Trump kill off the only competitor, it’s pretty bizarre.” Microsoft has discussed adding an agreement whereby it would have one
year to separate TikTok from its Chinese parent and address US
government concerns over the security of the data generated by the
app.
Other companies including Apple and Twitter are reportedly interested. In fact, Twitter is on talking terms with ByteDance expressing interest in buying TikTok's US operations. But it remains unclear whether Twitter can afford to buy TikTok from its Chinese owners and can complete a deal within the 45-day window.
Things have been changing every few days. “There is an opportunity to
capitalise on the short-video-sharing market but for creating a better
product than TikTok instead of a TikTok clone,” said Rutvik Doshi,
managing director at Inventus Capital Partners. “Money will continue to
flow into this space as some investors would want to take a bet
depending on their risk capital. But some, like me, would not jump into
an opportunity yet as the full picture is still not clear.”
TikTok does not operate in China, and such a transaction would not extend to its China-facing sister app Douyin, the financial daily reported. For China-based parent ByteDance, India has been the biggest market of TikTok with over 650 million installs, or nearly 30% of the total, according to SensorTower data. However, it has a user base of approximately 100 million Americans, which has left behind most popular apps like Facebook Messenger, Snapchat, WhatsApp and more.
What's more, President Trump's drive to ban TikTok is not, necessarily, overwhelmingly shared by the US public. The app has grown to become a mainstay among the phones of young American adults and a recent Morning Consult survey that included 2,200 participants (adults) showed that one third actually opposed the ban.
The ban, in fact, could lead to the younger cohort, not particularly known for their high rates of voter turnout, exacting electoral revenge in the upcoming election. With President Trump behind by double digits in the majority of US polls to Democratic candidate Joe Biden, this may also likely become an important factor in whether the Microsoft-TikTok deal does.
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