Since President Donald Trump said he plans to ban TikTok, the popular social media video app, from operating in the U.S. last month, the sale of the app’s U.S. arm is entering the final stages. The TikTok purchase, considered to be worth $20 billion to $50 billion, seems to be down to two groups of bidders.
Multi-Billion TikTok Purchase Deal on the Horizon
ByteDance Backed into a Corner
Officials have said that the app poses a national risk because its Chinese parent company, ByteDance, handles the personal data. The White House stipulated that national security concerns need alleviating, forcing ByteDance to sell TikTok’s U.S. operations. It was also specified that the buyers would have to have a technology services provider to enable the data transfer from China to the States.
The trendy short-video app has up to 80 million daily active users in the U.S. alone. The blockbuster deal, worth tens of billions of dollars, will undoubtedly add to the success and development of ByteDance Technology Co Ltd, already reported to be valued around $75 billion.
Two groups have submitted bids in a race to buy the video app. The retail giant Walmart is jumping into the TikTok bid with Microsoft and Oracle Corporation, which could include an alliance of investors.
The Bentonville, Arkansas retailers, Walmart, said that it was interested in buying TikTok because “the way TikTok has integrated e-commerce and advertising capabilities in other markets is a clear benefit to creators and users in those markets.” They confirmed that they were participating in discussions so that the U.S. government regulators’ concerns could be satisfied.
“We believe a potential relationship with TikTok U.S. in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses,” Walmart said.
Behind Microsoft, in 2019, Oracle was the second-largest software company (by market capitalization and revenue) in the world. Their bid for TikTok reportedly stands at $20 billion.
“The proposed deal would comprise $10 billion in cash, $10 billion in Oracle stock and 50% of annual TikTok profit to flow back to TikTok’s China-based parent company, ByteDance, for two years, according to one individual with knowledge of the deal,” reported TheWrap.
How Each Company Could Benefit
The deal could draw from Walmart’s digital sales background, possibly leading TikTok down an e-commerce app route, much like ByteDance’s Chinese-language video app, Douyin.
As an enterprise software company, Oracle could use TikTok’s data to benefit it’s advertising businesses.
Either way, any deal will stop the months of turbulence TikTok has been suffering amid the Trump administration pressure.
Resolution and Delays
Following the bids was the resignation of Kevin Mayer – TikTok’s chief executive. Despite joining just four months previously, Mayer announced he was leaving because he signed for a global position and did not want to work for the “carved-up” company. In a memo to colleagues, he also suggested that a deal for TikTok mighnt be close.
“We expect to reach a resolution very soon,” Mr. Mayer wrote.
However, deal talks have been slowed because new China rules mean ByteDance must seek approval to sell from the Chinese government. New restrictions imposed by Beijing on the export of artificial intelligence tech have been added to a revised list of export-controlled products. The Ministry of Commerce published the list on its website Friday, meaning Government licenses will be required for foreign transfers to safeguard national economic security.
Although discussions have remained out of the public, they have been fluid, and bidders could still change. A purchase decision by ByteDance is close, and whichever firm is chosen, TikTok’s U.S. company will likely be led down a different path.
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What are your feelings about the sale of TikTok? Did Trump make the right call? Whom would you like to see make the TikTok purchase?