With the US Government’s deadline for the sell-off of TikTok looming, a new report has suggested that the Chinese Government would actually prefer to see the app shut down, as opposed to being sold into US ownership.
The TikTok negotiations, in which Microsoft is still seemingly the lead bidder, have been thrown into disarray in the last week after the Chinese Government announced new regulations which restrict the sale of technological advancements – including algorithms – within foreign trade deals.
TikTok’s parent company ByteDance has been in negotiations with Chinese and US officials as it seeks to find a way beyond the current impasse – but according to a new report from Reuters, the new Chinese regulations may actually be part of Beijing’s broader opposition to a sell-off of the app.
As per Reuters:
“Chinese officials believe a forced sale would make both ByteDance and China appear weak in the face of pressure from Washington, the sources said, speaking on condition of anonymity given the sensitivity of the situation.”
Indeed, this has been one of the key risks in the process all along – very early on, when US President Donald Trump first announced his coming Executive Order which would force TikTok’s sale, reports suggested that Chinese officials were furious at Trump’s action, which essentially holds a Chinese company, in ByteDance, to ransom over the app.
This element is also a risk for Microsoft, or any company bidding for the platform, with respect to its future in China, with reports also suggesting that any such deal could lead to further sanctions and punishments in retaliation for the forced sell-off, if it goes ahead.
But now, it may not even get to that point. If these reports are correct, then China’s ruling CCP will actually push TikTok towards a full ban in the US, rather than let the sale go through.
That is of course, unless negotiators can find another way around, and within that, one option is that TikTok could be sold off without its core algorithms. Which would essentially leave it as just a shell – the bidders would be paying, in the end, for the TikTok branding and that’s about it.
Whether the CCP would allow even that to happen is another question, given the potential concerns over perception. And if they did, why would any company pay for just the basic app, with no tech? Surely TikTok without its systems is not TikTok as we know it.
Apparently, one bidder would, with Triller still interested in buying a hollowed-out TikTok, as per reports. But the price tag, you would think, would have to be significantly lower – and then, what would you really be left with? Would TikTok, the platform, ever be the same if its core algorithms and systems were stripped away?
It’s amazing to consider that a relatively simple, short-form video app is now central to a potential new cold war, with the highest-ranking Chinese and US officials scrutinizing the particulars of any such deal.
How it eventually plays out is anyone’s guess at this stage, but the deadline, as noted, is closing in, which will bring it to a conclusion, one way or another, very soon.
How soon exactly?
To clarify, in his original statement on the coming ban, US President Donald Trump noted that TikTok had till September 15th to be sold off to a US company, or face a ban in the US. This was before Trump had signed the official Executive Order on the process, which was eventually signed on August 6th. Within that document, it states that the sale needs to happen “beginning 45 days after the date of this order”. That actually, officially, puts the final date at September 20th, five days longer than the initial announcement.
Shortly after this, however, another EO came from the White House which gave ByteDance 90 days to divest its purchase of Musical.ly, the app that eventually became TikTok in the US. That order also directs ByteDance to destroy any US user data – though it’s not entirely clear how the two orders overlap.
So, does ByteDance have till September 20th or November 12th? Honestly, it’s a little hard to tell based on the seemingly contradictory documents – but what is fairly definitive is that President Trump will be pushing for a deal within the next week.
As per President Trump on Thursday:
“We’ll either close up TikTok in this country for security reasons or it’ll be sold. I’m not extending deadlines, no, it’s September 15th – there’ll be no extension of the TikTok deadline.”
So, pretty clear, right? Crystal?
Technicalities aside, it does seem like we’ll see the next stage of the TikTok sell-off – whatever that may look like – early next week. That could result in a transfer to Microsoft, or another consortium bid. Or it could kick off a new round of international trade sanctions.
The stakes are indeed extremely high, and while it may seem to many that TikTok is a mostly frivolous, fun app where young people engage in the latest viral dance trends, symbolically, it could end up being a lot more.
And yes, it could be banned outright. The blocking of TikTok in the US, as has already happened in India, remains a very real possibility at this late hour of negotiations.
It’s going to be a tense weekend of negotiations, you’d expect.