The Chinese video-sharing social networking service ‘TikTok’, which is owned by the Beijing-based internet technology company ByteDance, has come under fire for suspicious practices potentially threatening national security and possibly collecting information on its users and then sharing that information with the Chinese Communist Party.
As a result, President Trump has threatened to ban TikTok’s access to the US market.
Major US tech companies Facebook, Google and Microsoft have been named as companies interested in taking over the US operations of TikTok. Microsoft appears the most likely suitor to maintain operations in the US, to the relief of over 100 million of US TikTok users.
Influencer Brandon Tatum voices his support of President Trump’s position and says Biden would never stand up for Americans rights as relates to China because “he’s in bed with China.”
From Associated Press regarding Trump’s Proposed Ban
Q. What would the ban look like?
A. The app would be pulled from the app store of Apple and Google and not function unless used by a virtual private network, experts say.
Q. How likely is the ban?
A. Experts believe that while the ban may seem legitimate, it likely won’t come to that, given the pressure by ByteDance to sell its stake and any control of TikTok to a U.S. company or completely spin off, says Ben Bajarin of Creative Strategies, an industry analysis and market research firm based in San Jose, California.
“I think a total spin-off or U.S. tech firm acquisition is the likely scenario here so it can keep operating,” he added.
Q. What does a ban mean for TikTok creators?
A. Many are trying to move followers to other platforms like YouTube and Triller, an entertainment platform built for creators. Some are trying to monetize through sites like Patreon, a crowdfunding platform for artists, musicians and other creators, says Amber Atherton, CEO at Zyper, a community marketing platform that connects brands with the top 1% of their superfans.
Atherton says teens will continue to access Tik Tok anyway through a virtual private network in the same way that teens access Instagram in China. But she says teenagers are devastated since TikTok is about everyday people where users can discover product demos and other information.
Q. What are the political consequences for a ban on TikTok?
A. Industry officials say that any ban could invoke some retaliation from China against U.S. businesses.
“It could make many companies wary of the U.S. government´s capricious decisions, which leads to instability and uncertainty, ” says Sucharita Kodali, an analyst at Forrester Research, an e-commerce research firm. “Investors then opt to park capital in more stable, predictable environments. Something of this nature is relatively uncommon. Usually, it happens when there are sanctions or other major political action.”
From Reuters regarding Microsoft as suitor
A potential shotgun wedding to Microsoft Corp (MSFT.O) for TikTok’s U.S. operations provoked an outcry on Monday on Chinese social media as well as criticism from a prominent Chinese investor in TikTok owner ByteDance.
The U.S. tech giant formally declared its interest on Sunday after President Donald Trump, who has cited national security risks posed by the Chinese-owned short video app, reversed course on a planned ban and gave the two firms 45 days to come to a deal.
The proposed acquisition of parts of TikTok, which boasts 100 million U.S. users, would offer Microsoft a rare opportunity to become a major competitor to social media giants such as Facebook Inc (FB.O) and Snap Inc (SNAP.N).
Shares in Microsoft, which owns the business social media network LinkedIn and is also seeking to buy TikTok’s Canadian, Australian and New Zealand interests, rose nearly 3% in early trades on Monday.
ByteDance has not publicly confirmed the sale talks. But in an internal letter to staff on Monday seen by Reuters, the company’s founder and CEO Zhang Yiming said the firm had started talks with a tech company it did not identify to clear the way “for us to continue offering the TikTok app in the U.S.”
Clinching a deal that will satisfy all parties and potentially act as a lightning rod for U.S.-China relations will be a tall order.
People close to the situation have told Reuters that all of TikTok could be worth $50 billion, but the forced sale of the U.S. division and some other units alone will likely yield much less than that.
“A forced deal under Washington’s shotgun could open up for endless litigations if it should result (in) an unfavorable outcome to existing private shareholders,” said Fred Hu, chairman of Primavera Capital Group, an investor in ByteDance and one of China’s best known private equity groups.
Hu said Microsoft was a credible buyer but questioned how selling large parts of TikTok’s operations at such an early stage of its growth could ever be a good deal for ByteDance.
“It absolutely makes no sense. Bytedance is an innocent victim of the mad politics and mad geopolitics. It is a sad outcome for Bytedance, for entrepreneurial capitalism, and for the future of global commerce,” he said.