TikTok sale: As April 5 deadline nears, White House close to approving deal

The White House is close to approving a deal that would allow US investors to buy TikTok’s US operations, taking control of the video app from its Chinese owners, Bytedance.

 

According to a Financial Times report, US President Donald Trump’s officials are set to meet on Thursday (IST) to discuss the negotiations related to the new owners of the app. It further added that the deal could be announced soon if Trump gave his nod.  This comes hours after tech giant Amazon put in a last-minute bid to acquire TikTok’s US business.

 

This comes ahead of the April 5 deadline for TikTok, which is required to find a non-Chinese buyer for its app’s operations in the US or face a ban amid security concerns.

 

The report states that Andreessen Horowitz, Blackstone, and some other private capital firms will own half of TikTok’s US business. TikTok’s existing investors like General Atlantic, Susquehanna, KKR, and Coatue will also take stakes and will constitute nearly 30 per cent of the business.

 

It is worth noting that any deal would require approval from President Trump, as well as TikTok’s parent company, Bytedance, and the Chinese government, which previously threatened to block any transaction.

 

To meet the requirements of the US legislation, which states that no more than a fifth can be in the control of a “foreign adversary”, Bytedance would only hold a stake below 20 per cent of the business. According to the Financial Times report, Larry Ellison’s Oracle would be securing TikTok’s US data as part of the deal.

 

Who controls TikTok algo

 

However, it is yet to be decided who will control TikTok’s highly sought algorithm. While one option is that Bytedance would continue to operate its algorithm, which has been a demand from the Chinese government, the other option is that the algorithm needs to be fully operated by a US entity, to comply with the US legislation.

 

The report suggests that even though Amazon made a last-minute bid to acquire TikTok, the odds are in favour of existing investors. Other than Amazon, Zoop, a startup run by Tim Stokely, founder of adult content social media site OnlyFans, has also submitted a bid in collaboration with a cryptocurrency foundation, according to a Reuters report.

 

Background of the showdown 

Former US President Joe Biden signed a bipartisan law, requiring TikTok to either sell its US business to a US entity or face a nationwide ban after concerns related to data security surfaced. Bytedance retaliated and filed a lawsuit against the US government, claiming that the concerns were overblown. It also sought to strike down the law as it violates the First Amendment.

 

Soon after, Trump, who was then a front-runner in the US presidential election campaign, joined the platform to share his election campaign-related content. After winning the elections, he asked the Supreme Court to pause the ban on TikTok. After taking office on January 20, he ordered a pause on TikTok's ban, allowing it to find a buyer in the US, the deadline of which ends on April 5.