TikTok: Potential Buyers and Challenges

Lawmakers are mandating the sale of TikTok to ensure its continued operations in the US. The Diplomat News is analyzing the likelihood of a sale, whether potential buyers have the financial resources to make the purchase, and the challenges that come with acquiring a popular social media platform.

This offer presents a great opportunity for someone looking to make a big impact in the social media world. An immensely prosperous social media platform, boasting a staggering one billion users spanning across 140 nations.

This opportunity appears highly advantageous for individuals possessing both ambition and financial resources. TikTok, owned by a Chinese entity, transcends ordinary social media platforms with its short-video-sharing features. It has emerged as a transformative force, revolutionizing social media and altering the dynamics of human communication.

The United States’ apprehensions regarding national security further complicate matters. Moreover, the prevailing protectionist sentiments and general perception towards China have taken a somber turn, prompting Congress to swiftly take action and exert pressure on the company.

Is the US Congress in control?

The US government now sees TikTok as more than just entertainment; it considers it a news and information platform that can also serve for propaganda. For years, the US had restrictions on foreign ownership of traditional media such as radio or cable stations; for policymakers, restrictions on TikTok are a natural consequence of the 21st century.

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On Wednesday (April 24), US President Joe Biden enacted a bill into law that mandates a change in ownership of TikTok, following its approval by a significant majority in the US Senate.

TikTok may be hoping for a savior to rescue its US operations. Yet, a limited pool of potential buyers exists, while Elon Musk currently focuses on rebranding X, formerly known as Twitter. Who else can they look to? What will happen to the 170 million US users if TikTok remains unsold?

60 Seconds of short History

In 2020, Donald Trump attempted to force TikTok’s owner, ByteDance, to sell the subsidiary to an American owner through an executive order, threatening its sale.

Although a potential deal with Oracle seemed promising, these efforts ultimately failed, as did an attempt to prevent the app from being available on app stores.

Since then, TikTok claims to have taken extensive measures to delete American users’ data from ByteDance servers and transfer it to servers based in the United States. This initiative, known as Project Texas, aims to ensure that the data remains beyond the reach of Chinese surveillance.

Despite the reassurances of experts like Milton Mueller, a cybersecurity expert at the Georgia Institute of Technology in Atlanta, who have found no substantial security threats, many US politicians and government intelligence and security agencies remain unsatisfied and seek further action.

Who would be interested in purchasing TikTok?

Acquiring TikTok, whether in its entirety or just the American portion, would not be a typical business deal. It would be a complex situation with geopolitical implications. One important question is whether ByteDance, the current majority shareholder, would still have control behind the scenes. Another concern is who would be responsible for managing and updating its powerful algorithm.

According to Mueller, who closely follows TikTok, a sale is theoretically possible but highly complicated and unlikely. He also points out that the Chinese government may not allow it, and the concept of selling only a portion of a globally interconnected social media platform is unclear and raises questions about what would be gained.

ByteDance appears prepared for a legal battle, while the Chinese government has shown restraint. However, they could potentially hinder a sale by imposing an export ban on the app’s technology. Without its algorithm, TikTok would lose some of its appeal.

Furthermore, it is challenging to establish boundaries and restrict access to an app that flows freely. App stores would need to block new downloads and updates for existing users.

Time is also a factor. Mueller has spoken with TikTok insiders who believe that divesting the app within a short timeframe is technically and operationally difficult. They mention that they would need at least six months, whereas a similar divestiture involving Grindr took a year, according to Mueller.

A high-priced item

The challenges keep piling up. Any ban in the United States would undoubtedly result in constitutional challenges under the First Amendment. “It would be American users who would have their speech suppressed, not foreigners or the Chinese government,” Mueller stated.

Then there’s the cost. Many analysts believe that despite all the obstacles, TikTok’s US business could be sold for more than $50 billion (€45.8 billion). Only a handful of companies, such as Apple, Amazon, Google, Meta, Microsoft, or Netflix, could afford to make such a hefty purchase.

However, some of these companies may face scrutiny from antitrust officials for owning too much critical technology.

Alternatively, TikTok could be spun off as an independent publicly listed company, either in whole or in part. Another possibility is that US-based private equity giants could step in.

Following the House of Representatives’ vote in March, former Treasury Secretary Steven Mnuchin stated that he is working on assembling a group of investors to acquire the company, although he did not provide any details. Ironically, Mnuchin was one of the individuals advocating for a sale four years ago when he served in Donald Trump’s Cabinet.

It’s Probably Not About Apps at All

It’s probably not related to apps at all. However, according to Milton Mueller, it’s not really about good business or national security. He believes it’s all part of the broader power struggle between the US and China, used for symbolic purposes.

Mueller argues that labeling a social media app as a tool for espionage and accusing TikTok’s CEO of being a Chinese Communist Party agent is misleading. But it appeals to both Republicans and Democrats, who view the US-China rivalry as a battle for dominance.

If ownership of TikTok is forced to be sold, it could establish a dangerous precedent for other countries to target US social media companies.

Mueller predicts that this digital protectionism will result in less competition and innovation in the social media industry. And who knows what the next national security threat will be? Maybe Chinese electric vehicles or battery systems? The cycle of retaliation may never cease.