InvestorQ : What is the latest on the plan to take a major stake by the global companies in Tik Tok?
Arusha Ray made post

What is the latest on the plan to take a major stake by the global companies in Tik Tok?

Answer
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4 weeks ago


The interesting part is that while there are keen suitors, Tik Tok owner, Bytedance, is not too enthusiastic. Here is what you need to know about the likely buyers.

· The deal to buy Tik Tok US operations could be worth $30 billion although China has stalled any attempts to buy the franchise. However, discussions on structuring the deal are still on.

· Potential buyers are also exploring if they can ask for Chinese approval to pass Tik Tok algorithm or even directly license the algorithm from Bytedance.

· ByteDance needs to find a buyer quickly to adhere to Trump’s order under which Bytedance needs to divest its stake in Tik Tok US operations. Senior US officials had raised concerns over the safety of the personal data of American citizens.

· Tik Tok is used regularly by over 100 million Americans as the home of entertainment, self-expression and connection. It is surely a strong franchise that Tik Tok has created and cannot be written off so easily.

· Bytedance has time till September 20, by when the ban on Tik Tok kicks in. The app is likely to face a ban in the US if no sale agreement is in place by then. However, China has already challenged validity of the ban in a US court.

· One option is to sell Tik Tok without the algorithm it uses to make recommendations to users. But that may not be too welcome for Microsoft and Oracle, as it would be pointless unless there is a substitute. The 2nd option is to negotiation 1 year transition.

· One possible way out would be Bytedance licensing the algorithm to the buyer of Tik Tok assets. While this may be acceptable to China, it is not clear if the US would accept.

Tik Tok is functionally similar to Douyin, which is the Chinese version of Tik Tok and they share the technical resources with Douyin, which makes the deal complicated. Bytedance has been in talks to sell Tik Tok's North American, Australian and New Zealand operations. Oracle, Microsoft and Wal-Mart are among the potential bidders for Tik Tok.