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Visitors are visiting the Appliance & TikTok booth. Electronics World Expo (AWE) will be held in Shanghai, China on April 27, 2023. On March 14, 2024, the United States is expected to pass a bill banning her TikTok.
Cost Photo | Null Photo | Getty Images
The United States may be trying to force ByteDance, the Chinese tech giant that owns TikTok, to sell its U.S. operations or effectively ban the app.
However, a sale seems unlikely, especially as China is expected to block the sale.
The House of Representatives on Wednesday passed a bill that would require ByteDance to sell TikTok, the social media platform it owns, within about six months in order for the app to “remain available in the United States.” Acknowledged. The bill has not yet become law and must be approved by the Senate.
The U.S. government has long argued that TikTok poses a national security threat because U.S. data could fall into the hands of the Chinese government.
US lawmakers are also concerned about the short video app’s alleged ties to the Chinese Communist Party, which the company denies.
However, even if the bill passes, it is unlikely that the Chinese government would approve the sale of TikTok’s U.S. operations.
“The problem is that the Chinese government is unlikely to approve these types of forced mergers and acquisitions,” Paul Triolo, an associate partner at consulting firm Albright Stonebridge, told CNBC’s “Street” on Thursday. He spoke on “Sign Asia”.
“Any kind of sale and subsequent merger or acquisition with another company would require approval from the Chinese government, which would likely reject it and would likely advise ByteDance to reject it. .”
What did China say?
Chinese Foreign Ministry spokesperson Wang Wenbin said Thursday that the U.S. bill “goes against the principles of fair competition and international trade rules,” according to a translation by NBC News.
“There is no fairness or justice if you can arbitrarily suppress good companies from other countries using national security as an excuse.Seeing something good and trying to make it your own by any means necessary is the logic of complete theft. “Required.” “
China is widely expected to block the deal, especially since this is not the first time the issue has arisen.
Last year, the Committee on Foreign Investment in the United States (CFIUS) It directed ByteDance to sell TikTok or face a ban. At the time, Chinese Ministry of Commerce Spokesperson Xu Jueting said China “firmly opposes” any U.S. move to force the sale of TikTok.
Focused on TikTok algorithm
Further complicating sales is TikTok’s algorithm. This is the app’s “secret sauce”, the technology that allows it to recommend content to users and keep them engaged.
Last year, when CFIUS directed ByteDance to sell TikTok, China’s Xu noted that any sale or divestiture would effectively mean exporting the technology, which would have to go through an administrative licensing process. He said there is.
China would have to approve the transfer of the algorithms as part of the sale, which Toriolo said is highly unlikely.
And it’s hard to imagine how TikTok’s U.S. operations could be separated from the algorithm if China didn’t want to include it in the deal. TikTok needs an algorithm to work.
“This algorithm is Chinese domestic technology, and the Chinese state has repeatedly stated: [it] believes such technology is important to national security. Therefore, this type of Chinese technology cannot be allowed to leave the country or end up in the hands of countries that China considers unfriendly,” said Richard, founder of research firm Radio Free Mobile. Windsor said in a memo released Monday.
“The severing of ties between ByteDance and TikTok USA is highly problematic because TikTok USA requires algorithms to function, but it would be against the wishes of the Chinese government and the laws it has enacted.”
Great reviews for TikTok
TikTok is one of the world’s largest social media apps, posing serious challenges to Facebook owners and others Meta and snap. TikTok became the most downloaded social media app in the U.S. in 2023, according to market insight firm Sensor Tower.
That makes it a hot asset for TikTok. Angelo Gino, vice president and senior equity analyst at CFRA Research, told CNBC that TikTok’s U.S.-only operations “could be valued in excess of $60 billion.”
But given the uncertainty surrounding the algorithm and the unlikely approval of the Chinese government, it’s not certain whether a sale of TikTok in the U.S. will even advance to the evaluation stage.
CNBC’s Jonathan Bunyan contributed to this report.