Navigating the Twist in Lawmakers' Strategy for TikTok: Seeking a Ready Buyer
The United States is edging towards a TikTok ban or acquisition demand. However, a major hurdle looms large: Identifying a suitable purchaser for the platform's hefty price tag of $100 billion.
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The United States is moving towards banning TikTok or pushing for a sale. However, there is a significant hurdle of finding a buyer for this $100 billion app.
The legislation passed in the House aims to make TikTok's Chinese parent company, ByteDance, sell the app to a non-Chinese entity. If this doesn't happen within six months, US app stores won't be able to offer TikTok.
It's important to note that a sale isn't guaranteed. The bill still needs to go through the Senate, where some lawmakers are hesitant about getting involved in business matters and restricting free speech. Additionally, even if the bill reaches President Joe Biden, the Chinese government has made it clear that they oppose a forced sale.
Lawmakers are making a bold move to ban TikTok due to worries about American data falling into Chinese spy agencies' hands. Despite some exaggerated concerns, the possibility of TikTok being up for sale has sparked rumors about potential buyers.
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A new study has found that over one-third of teenagers admit to spending excessive time on their phones.
Silicon Valley executives are eager about the potential of TikTok, which could become the most valuable app they do not currently own. Analyst Dan Ives estimates that the US segment of TikTok, with its 170 million users, could be worth around $100 billion.
If TikTok were to be sold, many financial and tech companies would be interested in its strategic value and large consumer base, according to Ives.
At a price tag of $100 billion, only a handful of companies have the financial capacity to purchase TikTok outright. However, potential buyers like Meta, Alphabet, and Microsoft may face regulatory challenges if they pursue the acquisition.
Gene Kimmelman, a former Justice Department antitrust official, raises a crucial question: "Who's going to buy it?" He believes that if companies like Amazon, Microsoft, Google, or Meta make the purchase, significant antitrust issues may arise.
Meta currently owns major social media platforms such as Facebook and Instagram. Alphabet, on the other hand, possesses YouTube, a direct competitor to TikTok. While Microsoft lacks its own social platform, its partnership with OpenAi is already drawing regulatory attention in both the United States and Europe.
Earlier this week, The Wall Street Journal reported that Bobby Kotick, the former CEO of video game publisher Activision Blizzard, is looking for partners to potentially acquire TikTok. According to sources familiar with the situation, Kotick discussed the possibility of teaming up to buy TikTok with a group that included OpenAI CEO Sam Altman.
CNN was unable to verify the report independently. Spokespersons for Kotick and Altman have not yet responded to requests for comments.
Apple, known as one of the most valuable companies globally, has a significant amount of cash but does not have its own social network. Despite this, Apple is facing various regulatory challenges, including new restrictions in Europe and a potential Justice Department action that questions the core of Apple's business model - its tightly controlled ecosystem.
Moreover, Apple's corporate culture may not align well with TikTok. Social media platforms require constant monitoring to remove hate speech and offensive content, which Apple does not have the infrastructure for. Apple's previous attempt at social media, the unsuccessful Ping, was considered one of the company's biggest failures.
The US House of Representatives is preparing to vote on a bill that could prohibit TikTok, a widely-used social media platform with 170 million American users, unless it separates from its Chinese owner, ByteDance. 
Will Lanzoni/CNN
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Addicted to TikTok? Wondering about the House vote to potentially ban it? Well, if you're a tech executive or private equity investor eyeing TikTok, be ready for a challenge. Remember the congressional hearing where Mark Zuckerberg had to apologize? Now, imagine TikTok's CEO, Shou Chew, calmly facing accusations of being a Chinese puppet. It's definitely not an easy tech job.
During the Trump administration, the US attempted to push for a TikTok sale by involving Oracle and Walmart in the acquisition. However, the plan was abandoned due to legal challenges from Beijing.
It is unclear if Oracle or Walmart would consider participating in a new bid for TikTok. The app's value has likely increased by several billion dollars since the failed sale in 2020.
China is unlikely to approve any actions that would mean losing control over its own technology, such as TikTok's powerful algorithm. The Communist Party emphasized at its recent annual meeting that high-tech innovation will be a key focus of Beijing's economic growth strategy.
One important factor to consider in evaluating a potential TikTok deal is whether China would permit ByteDance to share its algorithm - the secret ingredient that keeps TikTok users engaged. Beijing views certain advanced technologies, like content recommendation algorithms, as crucial to its national interests. It may even choose to have TikTok exit the US market rather than give up its algorithm.
Detaching the algorithm from ByteDance would be a challenging process, as it would require close examination by US regulators. Additionally, we anticipate facing strong legal opposition from ByteDance in the US, which could potentially delay any immediate actions related to the 202 area code.
CNN’s Brian Fung provided additional reporting on this matter.
Editor's P/S:
The potential ban or sale of TikTok in the United States has sparked significant debate, raising concerns about national security and the future of the popular app. While the legislation aims to protect American data from falling into Chinese hands, it faces hurdles in finding a suitable buyer for the $100 billion app. The Chinese government's opposition to a forced sale further complicates the situation.
The article highlights the potential interest from Silicon Valley executives in acquiring TikTok, given its large user base and strategic value. However, antitrust concerns could arise if companies like Meta, Alphabet, or Microsoft pursue the purchase. Additionally, Apple's lack of social media infrastructure and potential regulatory challenges make it an unlikely candidate. The report also mentions Bobby Kotick's exploration of a potential acquisition, but this remains unverified. Ultimately, the fate of TikTok in the US remains uncertain, with the Senate vote and potential actions from the Chinese government playing a crucial role.
