TikTok Considers Sell-Off to Appease Concerns Around Ownership Conflicts

With TikTok facing a potential ban in the US, the company is already working on contingency plans, which, in a worst-case scenario, may see parent company ByteDance sell off TikTok in order to maintain its operations and revenue potential.

As reported by Bloomberg:

“TikTok’s leadership is discussing the possibility of separating from ByteDance, its Chinese parent company, to help address concerns about national security risks. A divestiture, which could result in a sale or initial public offering, is considered a last resort, to be pursued only if the company’s existing proposal with national security officials doesn’t get approved, according to people familiar with the matter.”

That’s a similar path to what TikTok was almost forced into back in 2020, when then President Donald Trump called for the app to be sold into US ownership, or face a full ban.

The Biden Administration eventually abandoned those plans, which, at one stage, had Microsoft and Oracle as the front runners to purchase the app. But now, amid growing concerns from cybersecurity experts, and increasing tensions with the Chinese government, The White House may once again be close to pushing TikTok into drastic action.

Though even that may not be a viable path. The Chinese Government would still have some say over say such action, and would have to approve the sell-off – which, given its various statements on the actions taken against TikTok thus far, it may not be willing to do.

Last month, in response to the growing bans of TikTok on government-owned devices in the US, Chinese Foreign Ministry spokesperson Mao Ning said that:

“[The US government] has been overstretching the concept of national security and abusing state power to suppress other countries’ companies. How unsure of itself can the US, the world’s top superpower, be to fear a young person’s favorite app to such a degree?”

This has been a common refrain from the CCP, that the US should not have the power to simply cancel a Chinese-owned app without clear reason for such.

It seems likely that the CCP would be none too pleased about a forced sell-off of a Chinese asset for the same reason – so even if TikTok and ByteDance were to explore this avenue, it still may not be possible under the current process.

Really, the next stage for the app hinges on the appearance of TikTok CEO Shou Zi Chew before the US House Energy and Commerce Committee, which will happen on March 23rd, where Chew will be questioned about the app, and the capacity for data sharing with Chinese-based groups.

If Chew’s answers fail to win over US senators, then you can bet that the calls for a TikTok ban will get even louder, while another spy balloon-type incident could be all that’s needed to force President Biden’s hand – and Biden does now have the power to ban the app, if he sees fit.

It seems likely that a compromise, of some kind, will need to be met, but the tense atmosphere around US-China relations doesn’t bode well for the app, as it currently stands.

I would still bet on TikTok continuing on in some form, but as noted, there are various elements at play that could indeed see it gone before the year is out.