ByteDance plans to use its stakes in Chinese technology firms to finance the future of the short video making application TikTok. For quite some time the company had been linked to being looking for potential acquirers to sell its branches in North America, Australia, and New Zealand. Although the company has been in talks with Microsoft Corp. and Oracle Corp. for weeks, there has been no finalized agreement among the companies.
The pressure from the US government and the president of the United States on the company to make ties with other companies remains high. Investors of ByteDance like General Atlantic also aims to buy large stakes in the company when it goes out for sale. In that case, Microsoft or Oracle would opt for a minor stake in the company.
It is estimated that the assets of the company are worth $ 25 billion to $ 30 billion, according to several sources. To help to finance the deal, the Chinese tech giant is planning to exchange some or all of their stakes in the Chinese company with equity in the TikTok assets.
The US government has clearly conveyed their expectation that they want to see a United States company lead TikTok business in the country and want to take the technology out from the hands of the Chinese company. Any deal made by ByteDance has to be finalized by the Committee on Foreign Investment in the United States (CFIUS), a government panel of United States.
Microsoft still remains the largest bidder for the assets of the Chinese company. They also have the potential, equipment, and technology to handle the algorithm and separate it from the Chinese base application or Douyin. The path is still being charted of how the company can be separated from the Chinese roots after the deal gets through. Redmond, a Washington based company predicts that the deal might be finalized as soon as September 15th of this year. Then the implementation of the deal would be highly monitored by CIFUS.
TikTok has been made the aim of the United States government as their relationship with China sours with every passing day. The two of the world’s most important economies had been in a duel for over a long time. They first locked horns in trade wars and since have raised different views over several matters like Hong Kong’s autonomy. The spread of COVID-19 pandemic from China has also affected the reputation of the country. Several countries across the globe have been raising their concern and have thrown out allegations that the Chinese government might be acquiring data from these Chinese tech firms. Based on this, India has already banned several Chinese applications from its AppStore. The United States follows the same ideology and questions the legitimacy in the privacy protection of Chinese applications.
The United States government has walked the extra mile by saying that any deal by any US company to acquire the Chinese tech would have the full support of the government if they receive a “substantial portion” of the deal.
Although Microsoft is clearly leading the race of acquiring TikTok, several reports had highlighted that Oracle’s president Larry Ellison has raised millions in campaign funds for Trump and are planning for a huge bid to acquire TikTok’s operation in US, Canada, Australia, and New Zealand.
After the provided 90 days time period given by the US government, the application will be banned from the United States.
TikTok to challenge the US president’s executive order:
On Saturday, the video-making application had said that they will go to court over the allegations that the Trump administration had made against them of being a national security threat.
On the 6th of August, the president of the United States signed an executive order against the Chinese application providing it 45 days to finalize a deal with a US-based company and divert off the Chinese investment from ByteDance.
In a statement from TikTok, reported by firstpost.com they said, “Even though we strongly disagree with the Administration’s concerns, for nearly a year we have sought to engage in good faith to provide a constructive solution. What we encountered instead was a lack of due process as the Administration paid no attention to facts and tried to insert itself into negotiations between private businesses.”
They also added that neither the company nor its users were treated fairly by the United States administration and made it known that they have no choice but to reach out to the judicial system of the country to attain a fair judgment.
The company’s short video making application that features a large genre of videos have been popular around the globe. The application saw more than 175 million downloads in the United States and over billion downloads all over the world.
Allegations against the application that it is being used to track the locations of federal employees, build dossiers on people for blackmail, and conduct corporate espionage has been made by Trump and his government. However, the company said that they had no link with the Chinese communist government and had never provided any data to them. They also have labeled the whole move made by the United States government as political.
Trump had repeatedly made his anti-china mentality known and has challenged the country on trade, military, and economic fronts.