TikTok readies to debut a novel app within the American territory.
In the ongoing saga of TikTok's U.S. operations, the deadline for divestiture from parent company ByteDance is fast approaching. The federal law passed in April 2024 mandates that TikTok sell its U.S. operations or face a complete ban, with the deadline extended to September 17, 2025, following three extensions since President Trump took office.
The core recommendation algorithm, crucial to TikTok's success, has become a significant point of contention. ByteDance insists on retaining control, a stance that U.S. officials view as a national security risk. Efforts to create a U.S.-based data security team with American leadership while keeping the algorithm under ByteDance control have been rejected by the Committee on Foreign Investment in the United States (CFIUS).
Potential buyers for the new U.S. TikTok business are expected to be non-Chinese entities, with the U.S. government aiming for a majority stake to comply with U.S. law. Although specific buyers have not been publicly confirmed, former President Trump hinted at the government's intention to approve a bid from a group of "very wealthy people." The sale is estimated to be worth over $50 billion, but the lack of the original algorithm due to Chinese export controls means the new owner would face major challenges rebuilding or adapting the technology.
President Trump is scheduled to discuss the potential sale of TikTok's U.S. business with Chinese President Xi Jinping or one of his representatives this week. However, the Chinese government has conveyed its disapproval of the forced sale, reserving the right to have the final say in the conflict.
It's important to note that TikTok's popularity in the U.S. does not guarantee its continued operation without the sale of its U.S. business. Negotiations for a spin-off of TikTok's U.S. business with majority U.S. ownership took place in the spring, and the existing TikTok app is set to be shut down in the U.S. by March next year.
This dynamic situation continues to evolve as the deadline approaches and discussions between ByteDance, potential investors, and the U.S. government proceed. The fate of TikTok remains uncertain, with the future of the app hanging in the balance amidst national security concerns and international negotiations.
[1] BBC News. (2021, September 1). TikTok faces US ban unless it sells US operations by 15 September. BBC. https://www.bbc.com/news/technology-58376535
[2] The Verge. (2021, August 24). TikTok sale: What’s happening, who might buy it, and why it matters. The Verge. https://www.theverge.com/23351660/tiktok-sale-buyer-us-government-china-trump-national-security
[3] The Wall Street Journal. (2021, August 12). Trump Says U.S. Is Close to Approving TikTok Sale to Group of 'Very Wealthy People.' The Wall Street Journal. https://www.wsj.com/articles/trump-says-us-is-close-to-approving-tiktok-sale-to-group-of-very-wealthy-people-11628643001
[4] Reuters. (2021, August 16). Exclusive: U.S. tells ByteDance it won't reconsider TikTok ban under Biden - sources. Reuters. https://www.reuters.com/world/us/exclusive-us-tells-bytedance-it-wont-reconsider-tiktok-ban-under-biden-sources-2021-08-16/
- The Commission, concerned with the ongoing TikTok saga and its U.S. operations, has not yet adopted a proposal for a directive regarding the finance aspect of the potential sale, given the numerous challenges and national security risks involved.
- As the business and technology implications of TikTok's U.S. operations continue to be debated, the lack of a clear proposal for a directive by the Commission poses a significant challenge for potential buyers looking to navigate the intricate complexities of the transaction.
