TikTok's owner offers to forego stake to clinch US deal, says report

ByteDance's concession will test whether Trump's threat to ban the app is a negotiating tactic

China’s ByteDance has agreed to divest the US operations of TikTok completely in a bid to save a deal with the White House, after President Donald Trump said on Friday he had decided to ban the popular short-video app, two people familiar with the matter said.
 

US officials have said TikTok, under its Chinese parent, poses a national risk because of the personal data it handles.

ByteDance's concession will test whether Trump's threat to ban TikTok is a negotiating tactic, or whether he is intent on cracking down on a social media app that has up to 80 million daily active users in the United States.

Trump told reporters onboard Air Force One late on Friday that he would issue an order for TikTok to be banned in the United States. “Not the deal that you have been hearing about, that they are going to buy and sell... We are not an M&A (mergers and acquisitions) country,” Trump said.

ByteDance was previously seeking to keep a minority stake in the US business of TikTok, which the White House had rejected.

Under the new proposed deal, ByteDance would exit completely and Microsoft Corp would take over TikTok in the United States, the sources said.

Some ByteDance investors that are based in the United States may be given the opportunity to take minority stakes in the business, the sources added. About 70 per cent of ByteDance’s outside investors come from the United States.

 

 

“The administration has very serious national security concerns over TikTok. We continue to evaluate future policy,” the White House said in a statement, declining to comment on whether Trump would accept ByteDance’s concession. ByteDance in Beijing did not respond to a request for comment. "We are here for the long run. Continue to share your voice here and let's stand for TikTok," TikTok US general manager Vanessa Pappas said on the app on Saturday.

Under ByteDance's new proposal, Microsoft, which also owns professional social media network LinkedIn, will be in charge of protecting all of TikTok's U.S. user data, the sources said. The plan allows for a US company other than Microsoft to take over TikTok in the United States, the sources added.

“What's the right answer? Have an American company like Microsoft take over TikTok. Win-win. Keeps competition alive and data out of the hands of the Chinese Communist Party,” Republican Senator Lindsey Graham wrote on Twitter on Saturday. Microsoft did not respond to a request for comment. As relations between the US and China deteriorate over trade, Hong Kong’s autonomy, cyber security and the spread of the novel coronavirus, TikTok has emerged as a flashpoint in the dispute between the world's two largest economies.

ByteDance has been considering a range of options for TikTok amid US pressure to relinquish control of the app, which allows users to create short videos with special effects and has become wildly popular with US teenagers.

ByteDance had received a proposal from some of its investors, including Sequoia and General Atlantic, to transfer majority ownership of TikTok to them, Reuters reported on Wednesday. The proposal valued TikTok at about $50 billion, but some ByteDance executives believe the app is worth more than that.