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TikTok may have already chosen a US buyer, but the deal still faces hurdles
Chinese-owned social video app TikTok might have already agreed to sell its U.S., New Zealand and Australian businesses to American firms, according to a report today by CNBC.
Owner, ByteDance Ltd., reportedly has two top bidders. Those are a partnership between Microsoft Corp. and Wal-Mart Stores Inc., and Oracle Corp. The acquisition is thought to be likely between $20 billion and $30 billion.
In August, TikTok was given an ultimatum by President Donald Trump: sell to a non-Chinese company or face a ban in the U.S. The company had for a long time been accused of being a national security threat by various factions in the government. Although TikTok filed a lawsuit against the ban, in recent days it was looking like a deal was going to be agreed upon.
Then the Chinese government dropped a bombshell at the last minute. Last Friday, the country’s export rules were updated, with the new rules affecting artificial intelligence used by TikTok and other firms. Under those new rules, “Catalogue of China’s Export Prohibited and Restricted Technologies,” it seems that ByteDance will now require a license to sell its technology to foreign firms.
The bidders are somewhat stuck in the middle as China and the U.S. lock horns over the future of global technologies. It’s not certain yet what China wants, whether that is to block the deal or just to throw a ratchet in the works and delay it – and possibly raise the price. The trump card it has laid down may also mean the U.S. government has to go ahead and ban the app, which will make it very unpopular with the millions of users inside the country.
According to reports, Walmart was at first vying to be the majority owner, although it’s reported that the U.S. government wanted a technology company to lead the deal, so now Walmart will become minority owner and Microsoft majority owner if the deal should go through. Walmart issued a statement late last week saying, “We are confident that a Walmart and Microsoft partnership would meet both the expectations of U.S. TikTok users while satisfying the concerns of U.S. government regulators.”
Photo: Solen Feyissa/Flickr
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