A Bloomberg report on Monday evening said that ByteDance is considering selling off a majority stake in its incredibly popular and fantastically annoying music app, TikTok, amid intensifying US government concerns that the China-based company is a security and espionage threat. However, the firm has denied the report as “inaccurate” and “meritless.”
ByteDance was previously reported to be preparing to wall off TikTok from the rest of its Chinese operations as part of a plan to reassure the powerful Committee on Foreign Investment in the US (CFIUS) that it doesn’t plan on abusing its access to the hundreds of millions of devices it’s installed on worldwide on behalf of China’s security services. The argument goes that all those government agencies need to do is ask, and China-based businesses will be forced to comply, due to both a lack of basic legal protections and sweeping laws consolidating government control over the nation’s domestic internet. Selling off a majority stake in TikTok would significantly assuage those fears, as the Beijing-based ByteDance would no longer have unilateral control.
According to Bloomberg, ByteDance’s wariness over the CFIUS issue seems to have continued to grow, with sources saying advisors are “pitching everything from an aggressive legal defence and operational separation for TikTok to sale of a majority stake.”
One source said that ByteDance believes it could make well over $10 billion (£7.7 billion) for a majority stake in the app, Bloomberg added. But if a sale proceeds, a source told the news agency, the likeliest scenario is that ByteDance will attempt to protect the value of the app by selling it to company investors like SoftBank, Sequoia Capital, or Susquehanna International Group.
ByteDance would obviously prefer not to sell off its crown jewel, according to Bloomberg, and less drastic options remain on the table. Another report in the Wall Street Journal on Monday indicated that ByteDance was looking at creating a headquarters for TikTok, which currently lacks an official one, outside of China. Bloomberg also noted that ByteDance, which did not seek CFIUS pre-approval for its original purchase of TikTok from Shanghai-based Musical.ly, could argue that the committee lacks legal standing to force a divestiture despite its massive userbase in the states and main office in Los Angeles.
ByteDance has denied that it has any plans to sell off parts of TikTok, according to Reuters. A company spokesperson told the news agency that there have “been no discussions about any partial or full sale of TikTok” and that “These rumours are completely meritless.”
In a separate memo to staff, Reuters wrote, TikTok chief Alex Zhu wrote that “From time to time you may read stories in the media that are not true. Today there is an inaccurate report claiming that ByteDance has considered selling part or all of TikTok... We went on the record saying it was not true, but they decided to publish it anyway. I want to assure you that we have had no discussions with potential buyers of TikTok, nor do we have any intention to.”
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