Wall Street is buzzing a few TikTok sale as Congress fast-tracks a bombshell bill that may require its China-based owner to unload it – but tech insiders say such a deal faces stiff hurdles, and that the video app’s users should brace for a possible shutdown as an alternative.
Chatter surged last week that bankers were already scrambling to place together bids for the wildly popular video app after a House committee on Thursday voted 50-0 to pass a bill that may force Beijing-based Bytedance to sell TikTok inside six months or face an outright ban within the US.
On Friday, President Biden made a surprise pledge to sign the bill – which is ready for a floor vote within the House as soon as this week and enjoys broad bipartisan support amongst US lawmakers who fear the app is a destructive propaganda and spying tool for the Chinese Communist Party.
Nonetheless, any prospective buyer would face static not only from US antitrust regulators but additionally the CCP, which has vowed to dam any forced sale. TikTok — whose CEO Shou Chew got here under intense grilling by Congress earlier this yr — has been directly urging its users to call their local representative in protest.
TikTok’s massive audience of some 170 million American consumers is an attractive prize for the handful of Big Tech firms with the resources to purchase it, experts told The Post.
Angelo Zino, a tech industry analyst at CFRA Research, said “almost any large-cap tech company on the market with business within the ad market would have interest” given the potential long-term boost to their bottom line.
Still, an acquisition by Microsoft, Meta, Apple or Google would raise major antitrust concerns, while smaller firms like Snap lack the resources to tug off a deal.
Software giant Oracle – which got here close to purchasing TikTok until a previous push to ban the app was shelved in 2021 – was among the many firms floated as a logical suitor.
“Oracle is actually a possible buyer,” said one tech executive who requested anonymity to debate the situation. The manager noted Oracle is currently storing the info of US users as a part of TikTok’s “Project Texas” initiative.
“They’re already partnered with TikTok,” the chief added. “They’re a natural buyer in the event that they wish to buy it, but I’m unsure in the event that they still wish to buy it or how much it will cost.”
A dark-horse contender may very well be Bobby Kotick. The previous Activision CEO has approached ByteDance Executive Chair Zhang Yiming to specific interest, in response to the Wall Street Journal, which cited an individual aware of the situation.
Kotick discussed the possible acquisition while seated with OpenAI CEO Sam Altman during a dinner at an Allen & Co. conference last week, sources told the outlet. The ChatGPT maker could use TikTok to assist train its AI models if a partner such as Kotick could raise the huge capital needed to tug off any deal.
The TikTok of today is way larger and more lucrative than it was when Oracle nearly sealed the deal last time, with operating profits reportedly topping $20 billion in 2022.
“At a Meta multiple, that’s $160 billion dollars,” the tech executive added. “Who’s going to purchase a $160 billion company? That’s hard.”
One media banker said he could be “shocked” if TikTok got sold since the “size of the deal is simply too tricky.”
China’s Commerce Ministry said last yr it will should approve the divestiture of TikTok from Chinese parent company ByteDance — and that it’s strongly against any sale.
In 2020, China passed a sweeping law requiring its tech firms to acquire an export license for artificial intelligence-related technology – something that Beijing could be highly unlikely to grant for a TikTok sale, in response to sources near the corporate.
Indeed, the CCP would view any attempt by the US government to force its hand as a “huge besmirchment of their honor and integrity as a sovereign nation,” in response to the tech executive.
The insider added that Beijing would fairly see TikTok shut down within the US than sell it under duress — even when it could bag $160 billion in the method.
“China is like, who gives a s—t,” the chief said.
Even when it were inclined to sell, TikTok CEO Shou Chew — who got here under intense grilling by Congress earlier this yr — believes the bill’s six-month timeline would make it nearly inconceivable to attain a sale soon enough to avoid the ban provision, a source aware of the corporate’s pondering said.
“This laws has a predetermined final result: a complete ban of TikTok in the USA,” TikTok spokesperson Alex Haurek said in a press release. “The federal government is attempting to strip 170 million Americans of their Constitutional right to free expression. This may damage hundreds of thousands of companies, deny artists an audience, and destroy the livelihoods of countless creators across the country.”
It’s also unclear what a possible divestiture of TikTok from ByteDance would mean for TikTok’s operations in other countries and for the flexibility of US users to connect with international audiences — or whether ByteDance would should divest TikTok in other countries just like the UK or Recent Zealand or hold onto those assets.
One other potential obstacle lurks within the final result of the 2024 election.
Presumptive Republican nominee Donald Trump – whose try and ban TikTok in 2020 was blocked in federal court – shocked the GOP’s China hawks by signaling last week he’s against the bill. Trump said “Facebook and Zuckerschmuck will double their business” if a TikTok ban is enacted.