Since the Chinese government took measures to make it more difficult for TikTok to sell its business to Microsoft and other US technology giants, the discussion surrounding TikTok not selling has become compelling. Earlier, President Trump issued an executive order requiring ByteDance to sell TikTok’s US business, otherwise, TikTok will be blocked. As the geopolitical conflict intensified and the TikTok sale deadline set by Trump is approaching, relevant discussions have become more intense.
People familiar with the matter said that the current situation is unstable, there are many possibilities, and the sale has not been completely ruled out. Another person familiar with the matter said that even if there is no full sale, TikTok may still need some sort of restructuring.
People familiar with the negotiations said that the US government officials involved in the negotiations are mainly concerned about TikTok’s data security and preventing the Chinese government from accessing these data.
President Trump has repeatedly stated that he hopes that American companies will acquire TikTok’s business. It is not clear whether there are any alternatives to dispel his concerns.
U.S. Treasury Department spokesperson Monica Crowley issued a statement stating that “according to the executive order that Trump signed on August 14 to divest TikTok, the department is currently only focusing on discussions about the sale.”
According to previous media reports, ByteDance has been exploring various possibilities, including selling TikTok’s US business to Microsoft, Wal-Mart, or Oracle.
The restrictions on TikTok are a continuation of Huawei’s executive order
In late last month, the Chinese government issued new restrictions on the export of artificial intelligence technology, prompting Bytedance to suspend related actions and assess the possible impact of the new regulations on the sale, which made the negotiation situation more complicated. One question is whether the new regulations will prevent all important TikTok algorithms from being included in the transaction. According to sources close to the bidders, if these algorithms are not in the sale range, TikTok’s attractiveness will be greatly reduced.
Even before that, selling was not a certainty. At the end of August, TikTok filed a lawsuit against Trump’s executive order. According to the administrative order, if TikTok does not find a buyer, it will face a ban.
According to people familiar with the matter, the US government was considering measures to require TikTok to protect data collected in the United States before the president proposed the ban. People familiar with the matter also said that specific measures include restricting data storage locations and the scope of access rights.
Last year, the US government issued another executive order stating that companies such as Huawei pose a national security threat. The restrictions on TikTok are a continuation of Huawei’s administrative order.
It is reported that Bytedance tried to propose a plan not to sell TikTok, and indicated to the Trump administration that shutting down TikTok is also a risky-one basis is that a large number of TikTok users are biased towards political conservatives. However, a group of teenagers had previously used the platform to sabotage the attendance of President Trump’s June campaign rally in Tulsa, Oklahoma, and the attendance rate was lower than expected. TikTok thus established the image of a politically progressive camp.
People familiar with the matter said that last week all parties discussed data security-related issues with representatives of the CIA in Virginia, including representatives of at least one of TikTok’s major investors (Sequoia Capital, Pan Atlantic, and Coatue Fund).
According to the administrative order on August 6, the White House gave ByteDance a 45-day period, and TikTok will face a ban if it cannot find a buyer. Trump stated that if TikTok is not sold to a US company, it will not be able to eliminate its threat to the US economy and national security. Under this deadline, TikTok needs to reach a sale agreement before September 20-this is too stressful for any M&A transaction, not to mention TikTok’s large, complex, and many international political impact cases.
Another presidential decree on August 14 stipulated that the deadline for completion of all transactions was November 12, 90 days later, with a possible extension of 30 days. In any case, the deadline specified in the second executive order will be later than the time of the US presidential election.
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