The Looming Question: Who Will Buy TikTok if the US Forces a Sale?
The United States Congress has passed a bill that may lead to the banning of the popular social media app TikTok, or compel its Chinese parent company ByteDance to sell it to a non-Chinese entity. The legislation aims to address concerns regarding data security and potential involvement of Chinese spy agencies in Americans’ personal information. However, the prospect of a sale raises an intriguing question: Who will buy TikTok?
If the bill becomes law and ByteDance fails to comply within six months, US app stores would be prohibited from offering TikTok. The sale is not imminent, as the legislation faces uncertainty in the Senate and significant opposition from the Chinese government. Nevertheless, the possibility of a potential For Sale sign on TikTok’s lawn has sparked speculation about potential suitors.
TikTok’s US segment, boasting 170 million users, is estimated to be worth around $100 billion. This substantial value has Silicon Valley heavyweights eagerly considering the opportunity. According to Wedbush analyst Dan Ives, a sale would draw significant interest from strategic players in the financial and tech industries.
However, only a few companies could theoretically afford to purchase TikTok outright. Meta, Alphabet, and Microsoft are among the contenders. But each faces regulatory challenges. Meta already controls Facebook and Instagram, while Alphabet owns YouTube, a TikTok competitor. Microsoft does not possess a social platform but could encounter regulatory hurdles due to its relationship with OpenAI.
Recently, Bobby Kotick, the former CEO of Activision Blizzard (which was acquired by Microsoft last year), expressed interest in finding partners to purchase TikTok. However, this report could not be independently confirmed.
Apple, with its vast cash reserves and lack of a social network, could also be an intriguing potential suitor. However, Apple has numerous regulatory challenges to address, including new limitations in Europe and the Justice Department’s challenging action against its tightly controlled ecosystem. Moreover, Apple’s culture may not be a suitable fit for TikTok, given the social media industry’s messy and unwieldy nature that requires constant monitoring to manage offensive content.
Any tech executive or private equity investor considering a TikTok purchase would need to be prepared to navigate the social media quagmire. They’d need to consider the political backlash, such as Mark Zuckerberg’s congressional hearings and Shou Chew’s handling of lawmakers’ accusations.
The US attempted to force a TikTok sale during the Trump administration, but efforts stalled due to regulatory hurdles and Chinese opposition. Oracle and Walmart were considered potential partners for the acquisition, but it is unclear if they would be interested in re-entering negotiations given TikTok’s increased value.
China may also resist any moves that result in surrendering control over its homegrown technology, including the powerful TikTok algorithm. Detaching this algorithm from ByteDance would be a complex process fraught with regulatory scrutiny and legal challenges, making a near-term sale uncertain.
In conclusion, the question of who will buy TikTok if the US forces a sale remains unanswered. Regulatory hurdles, political backlash, and Chinese opposition present significant challenges to any potential suitor. Despite the uncertainty, the possibility of owning a valuable social media platform with 170 million US users continues to attract tech giants and investors alike.
