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Tuesday, March 21, 2023

TikTok will have to sell its US operations and sever all ties with China if it doesn’t want to be blocked in the US

TikTok will have to sell its US business and sever all ties with China if it doesn’t want to be blocked by the US. According The Wall Street Journalthat was the warning the White House recently issued against ByteDance, the parent company of the popular video app.

The above post says the Chinese company was notified of the ultimatum through the Committee on Foreign Investment in the United States (CFIUS), which is part of the US Treasury Department. Everything suggests that the security check that several agencies were carrying out would have been canceled in order to exclude the Asian giant from interfering with the application. And that there will be no intention to take it back.

TikTok can’t say the US threat came as a surprise. Yesterday we learned that the social network is ready to sell its business in this country. However, it was clear that this was the last resort. This was mainly aimed at convincing the Joe Biden administration of the feasibility of the Texas project.

The latter consists of “closing” the data of TikTok users in the United States, storing and managing them in Oracle’s cloud structure. Larry Ellison’s company will also ensure that any information it holds is not shared without permission. While an independent board chosen by the US government will oversee its overall operation. The project has been under discussion for months, but the resurgence of criticism of the application will lead to its final rejection.

For now, TikTok says there is no better alternative than Project Texas for data protection in the United States. The company claims that the security level of this offering exceeds that of any other North American company that handles its users’ sensitive information. The video app is estimated to have invested over $1.5 billion to build this framework.

US demands sale of TikTok

According Bloomberg, the next step for CFIUS will be to begin the process of finding and approving a buyer for the U.S. TikTok business. The procedure, which will be much more complicated than it seems at first sight. The thing is, the hypothetical next owner of the video app would be forced to overhaul the platform’s algorithm to prevent any possibility of spying by China.

If such an opportunity arises, the report assures that there will already be several stakeholders who will get their hands on TikTok. In any case, no specific name is mentioned. The possible takeover of the social network was one of the main concerns of 2020, when Donald Trump also wanted to veto it. By then, companies such as Microsoft, Oracle, and even Twitter had entered the scene in an attempt to shut down the company. But none of them succeeded.

On the side of ByteDance, the atmosphere would be quite tense. The company will even consider suing the United States if it adopts a “sell or block” position. Moreover, dealing with the process of selling TikTok will not be so easy, since China will also have to give its consent.

ByteDance is currently 60% owned by global investors. So far, 20% belongs to its employees and the remaining 20% ​​belongs to the company’s founders, led by Zhang Yiming and Liang Rubo. Although the voting rights of the latter are greater than those of other shareholders.

If TikTok cuts ties with its Chinese parent company, its business in the United States is estimated at between $40,000 and $50,000 million.

Read also: TikTok has unveiled an ambitious plan.

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