TikTok may split from ByteDance if US deal stalls

TikTok may split from ByteDance if US deal stalls

The division of the operation can create a new business in the American economy valued between US$ 40 billion to US$ 50 billion
TikTok management is considering separating the app from ByteDance , its Chinese parent, to help address US concerns about national security risks.

A divestment, 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 submitted to national security officials is not approved, according to people familiar with the matter, who declined to comment. be identified.

Even so, the Chinese government would have to agree to such a transaction, the people said.

TikTok’s US arm could be valued at $40 billion to $50 billion based on social network multiples and other factors, according to Bloomberg Intelligence analysts Mandeep Singh and Damian Reimertz.
TikTok has come under scrutiny for being controlled by a Chinese company, raising concerns from US officials about possible manipulation or spying by China — a fear that TikTok is trying to address.

The company, which is undergoing a national security review by the US Committee on Foreign Investment (Cfius), agreed last year to implement a series of changes under a plan called “Project Texas”.

The proposal includes bringing in US tech giant Oracle to host US user data and overhauling its software, as well as appointing a government-approved three-person oversight board. Many of these actions are already underway.

But Cfius, which is a panel of several agencies involved in national security, has stalled its review process, leaving TikTok unsure whether its plans will be enough to continue operating in the US, the people said.

Justice Department committee members are unwilling to accept TikTok’s proposal, according to others familiar with the matter.

“Neither the TikTok ban nor TikTok’s divestment of ByteDance can address national security concerns about data transfers,” said Brooke Oberwetter, a spokesperson for TikTok.

“Under Project Texas, TikTok data for our US users would be held to a significantly higher security standard than any comparable US company.”

TikTok is also facing several bills in Congress, some of which call for a separation. Lawmakers, concerned that the app could be forced to share data with the Chinese government or used as a tool of influence by China, have tabled several proposals with bipartisan backing that call for banning the video-sharing app or selling it.

TikTok CEO Shou Chew has been asked to testify before a House committee next week about the app’s privacy and data security practices and the company’s relationship with the Communist Party of China.

ByteDance was valued at around $220 billion in a recent private market investment by G42, an Abu Dhabi artificial intelligence company, according to Bloomberg News.

That’s a significant discount from the $300 billion figure the TikTok parent set during a share buyback program last year.

G42, controlled by UAE Sheikh Tahnoon bin Zayed Al Nahyan, acquired a stake of more than $100 million from existing investors in recent months through its 42XFund, people with knowledge of the deal said.

Another fund bought a stake in ByteDance at a $225 billion valuation soon after, according to one of the people, who asked not to be identified.



Thalla Lokesh is the founder of Technicalwebhub. He is an expert in Search Engine Optimization, and Social Media Marketing. He is a Professional Blogger. He has worked in Website Development, Blogging, Search Engine Optimization, and Online Marketing for the past couple of years.

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