The Chinese government has signaled it will not allow a forced sale of TikTok, limiting options for the app’s owners as buyers begin lining up to bid for its US operations.
Chinese officials have criticized the US for its moves targeting the popular short-form video sharing app. They have also sent messages to TikTok’s Beijing-based owner ByteDance, which company executives interpreted as the Chinese government preferring to ban the app in the US rather than sell it, according to people familiar with the matter.
That prospect puts ByteDance in a difficult position as TikTok faces its most serious threat to its existence in America, its biggest market with 170 million users.
In Washington, the House voted overwhelmingly to approve a bill on Wednesday that would require ByteDance to sell TikTok or face impeachment. banarguing that its owners’ collection of American users’ data poses a national security risk.
TikTok, for its part, has announced that it will not share data with the Chinese government even if Beijing demands it.
The bill faces debate in the Senate, where its members are expected to take a more cautious approach. The president Biden however, he said he would sign a bill if it reached his desk.
During a press conference on Thursday, a spokesman for China’s Ministry of Commerce said the US should “stop unduly pressuring” TikTok, adding: “The relevant party should strictly comply with Chinese laws and regulations.”
The comment was seen by some ByteDance executives as reinforcing Beijing’s message to the company that it would face regulatory hurdles if it sought to divest TikTok. Last year, China warned that selling or divesting TikTok would involve exporting technology and would have to be approved by the government.
ByteDance founder Zhang Yiming, who owns a major stake in the company, has not said he is in talks with outside buyers about selling TikTok, people familiar with the matter said.
Former Treasury Secretary Steven Mnuchin said Thursday that he is putting together a consortium to try to buy TikTok. The Wall Street Journal reported that Bobby Kotick, the former CEO of video game publisher Activision, approached Zhang.
Over $100 billion
Any price tag is estimated to be over $100 billion. TikTok’s revenue was about $20 billion last year, but it didn’t make a profit, according to people familiar with the platform’s financial data.
TikTok is once again in the crosshairs of geopolitical tensions between the US and China, having survived several regulatory challenges in the past. In 2020, then-President Donald Trump tried to ban the implementation through an executive order, but was blocked by the courts.
Since then, TikTok has been struggling to implement a codenamed feature Project Texas to protect the data of US users. Company executives were once certain they could reach a deal with US regulators to allow the app to operate freely in the country. But scrutiny has increased, with the CEO appearing before Congress twice in the past year. The state of Montana also passed a law banning the app, a move TikTok is challenging in court.
Last year, ByteDance’s spending on U.S. lobbying efforts rose 77 percent to $8.74 million, according to OpenSecrets, an independent platform that tracks political spending. It has, however, focused on the Senate, as the legislation is expected to face a more difficult path for the company there than in the House.
TikTok’s global success is seen in China as a rare triumph for a country that for decades was the world’s factory but has struggled to create its own tech brands.
“Policymakers in Beijing see the bill as an attempt to rob this valuable asset and will not support it,” said Tom Nunlist, a Shanghai-based technology policy analyst at Trivium China, a consultancy.
“Theft”
Some Weibo users noted that the effort of USA to force a sale of TikTok was tantamount to theft, and they wanted ByteDance to fight back harder.
“Just like Huawei, TikTok did nothing wrong,” one user posted. Telecoms giant Huawei Technologies has faced years of restrictions from the US over claims it can share sensitive information with the Chinese government, which the company denies.
Other Weibo users, however, likened TikTok, which faces a ban in the US, to other Western apps, such as Facebook and X, which are not available in China. TikTok is also not available inside China, where ByteDance operates Douyin, a similar app that uses a similar algorithm structure to recommend content but is subject to censorship by the Communist Party.
If TikTok is banned in the US, it will pave the way for more such actions against Chinese companies on national security grounds, Trivium’s Nunlist said.
President Biden last month ordered the Commerce Department to launch an investigation into foreign software in cars, citing Chinese technology as a potential national security risk.
As long as ByteDance remains willing to shut down TikTok rather than give up ownership, it will put pressure on lawmakers and the Biden administration about the political risks of taking down the app, said Hu Xijin, former editor-in-chief of the Global Times, a newspaper backed by CC China.
“China’s top leaders will likely prioritize national dignity over ByteDance’s financial interests,” Gabriel Wildau, chief executive of consultancy Teneo, wrote in a note to clients on Thursday.
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