TikTok in talks to avoid a full sale of its U.S. operations

TikTok in talks to avoid a full sale of its U.S. operations
TikTok parent ByteDance has to divest itself of the app's U.S. operations by September 15th or else the popular short-form video app will be banned in the states. The U.S. is concerned that because of perceived ties to the Communist Chinese government, TikTok users could have their personal information obtained by the Chinese. Thus, President Donald Trump issued an executive order forcing TikTok's parent to get rid of the the app. Still, ByteDance denies that the security of American TikTok users is at risk. In fact, ByteDance says that the only servers used by TikTok for its U.S. subscribers are in the U.S. and Singapore.

Will President Trump settle for less than a full divestiture of TikTok by ByteDance?

Over two billion times TikTok has been installed from the App Store and the Google Play Store. 100 million users in the states and 800 million globally use the app to create 15 to 60 second videos featuring lip-syncing, pranks, dancing, DIY clips, and more. Microsoft was one of the leading candidates to buy TikTok and other possible buyers include Twitter, Oracle, and Walmart. As recently as two weeks ago, ByteDance said that a deal was close to being announced and Kevin Mayer gave up his position as CEO. Mayer came to TikTok from Disney where he worked on the Disney+ streaming service. At the time, the move was seen as an attempt by ByteDance to inject some Americana into the app.

But things have apparently changed and the Wall Street Journal reports today that the U.S. government and ByteDance are having discussions about an alternative that would allow ByteDance to avoid a full divesture of TikTok's U.S. operations. The U.S. had to rethink its demands after China put restrictions on the export of its AI technology; this could have a negative impact on the sale of the app because it might not allow TikTok to include its important algorithms in any deal with a U.S. firm. If the algorithms are not included, the purchase of TikTok becomes less attractive.

ByteDance has been trying to convince President Trump that he would be taking a huge political risk if the app is shut down. That's because TikTok users-surprisingly-are more conservative than thought. Thus, forcing the app to shut down could be upsetting to voters that the president is counting on. But that view of TikTok seems out of touch with reality. After all, a large number of teenage subscribers ordered tickets to the president's rally in Tulsa, Oklahoma, and didn't show up in an effort to embarrass him with a plethora of empty seats.

Regardless of which political party favors TikTok, time is running out. The bottom line is that if no deal can be salvaged in less than five days, the president might be forced to accept a deal that would be a far cry short of what he was hoping for. For example, one option could be a restructuring of TikTok that would have it take on an American partner to keep its data secure and to take a minority stake in the company. Still, the president doesn't back down easily and with his current hatred of China because of the coronavirus, Trump might still hold out for a divestiture of the app. His base would surely see a partial victory as a critical victory against China nonetheless.

For now, the Treasury Department "is focused solely at this time on discussions associated with the sale of TikTok in accordance with the August 14 divestiture order signed by the President."


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