TikTok is very close to being banned in the US, a country where the network has 170 million users. It got here because of rising tensions between the US and China, and because politicians who are otherwise enemies have found (rarely) common ground. Why is it almost impossible to sell TikTok? How complicated is the structure of the ByteDance group? What do people who are outraged by his path say.

How much can TikTok cost?

TikTok has more than a billion users worldwide, of which 170 million are in the US. If it were to be sold, the price could exceed $100 billion, especially since, as the Financial Times recently wrote, the network’s sales in the United States amounted to $16 billion last year, which means that TikTok can be valued at $150 billion.

The publication also wrote that last year ByteDance’s global sales amounted to 120 billion dollars, which is 40% more than in 2022. The amount is huge, and with these figures ByteDance is close to Meta,

Even if only the American “division” of TikTok were sold, it would still be worth tens of billions of dollars, so there would be very few potential buyers. Few companies would afford such an acquisition.

• Why America is so afraid of TikTok algorithms

TikTok costs a lot, so from the beginning the number of investors who could afford to buy it is limited, and the formation of a consortium is difficult, since one of the parties may exit at the end.

Then, because it would be a highly controversial operation involving a Chinese group, it would take an extremely long time to get all the approvals from the relevant authorities. It will be one of the largest deals in technology and could take up to a year to complete.

The bill to ban TikTok must also be approved by the Senate and then signed by President Biden. From now on, ByteDance has six months to do what was asked of it.

Too difficult even for tech giants

The process would be difficult if the buyer was one of the big tech giants, because it would be difficult to get the green light from the competition authorities. This company, buying TikTok, would become too strong and end up putting “sticks in the market”. wheels” competition. In this landscape, a possible transaction is unlikely to receive all the approvals, especially since there is a network connected to China at the center.

• Tightening the noose for TikTok in the US: an ultimatum from the US government

TikTok also came pretty close to being forced to sell in the US in 2020 when Trump was in power, with the press reporting that Microsoft, Walmart and Oracle were among the companies interested, and any of them could be interested in trying again in 2024. But there is no evidence of this, and in four years TikTok has become more valuable as the number of users in the US has doubled.

Everything is complicated by the fact that it is not even clear what exactly will be sold. According to the decision of the House of Representatives, the ByteDance group must complete the sale, which will ensure that TikTok is no longer under the control of a “foreign adversary”, including China.

After this hypothetical hunt, ByteDance will NOT be allowed to have any ties to the new company, nor will they be allowed to control TikTok’s algorithms, which are known for their quality and effectiveness in “hooking” users to the phone.

One thing is clear: China will never give up the “recipe” of TikTok’s algorithms, and the “separation” of TikTok’s algorithms from ByteDance will be impossible to achieve and control.

• TikTok, Trump and bans – Is the United States careful or is it starting to behave like China?

After the 2020 episode when Trump tried to force the sale of TikTok USA, China added TikTok’s recommendation algorithms to its so-called “export control list,” meaning that any sale to a foreign country can only take place after approval by the Chinese government. And the USA has such lists of technologies and items that CANNOT be sold without permission to China or other “unfavorable” states.

The algorithms were created in China by very smart Chinese IT people. In America, there is a fear that these very “smart” people may come up with manipulation campaigns, with the help of which American users will see mainly clips that will create a division in society, at the request of the Beijing authorities. There is no evidence that such a campaign even took place on TikTok.

China will be angry and retaliate

When the Trump administration tried to force the sale of TikTok in 2020, China imposed restrictions on exports of the technology. As Sino-US relations have cooled further since then, it is clear that the Chinese state will react “ugly” if TikTok even comes close to being banned.

A Chinese diplomat in Washington recently made it clear that “it is unfair to use national security as an excuse to liquidate successful companies in other countries.”

Interestingly, one Chinese official cited “fair competition and international trade and economic rules,” a somewhat ironic reference given how difficult it is for Western companies to enter and survive in the Chinese market.

China’s response will almost certainly mean tougher measures against American companies that do large business in China, the most prominent name in this regard being Apple.

There are no signs that ByteDance is preparing for a potential sale. After the vote in the House of Representatives, the head of the company, Shaw Ji Chu, said that TikTok will use its legal rights to block the bill.

Undoubtedly, the ByteDance group will go to the US courts and a long process will begin. China has also given no indication that it plans to approve the sale of TikTok or “parts” of the popular app. On the contrary, earlier Chinese officials directly stated that there was no problem.

In terms of shares, the ByteDance group says 60% of the shares are owned by international investors, including some from the US, such as Susquehanna Investment Group and General Atlantic. The remaining 40 percent of the shares, the group said, are owned 20 percent by the Chinese founders and 150,000 employees, several thousand of whom are Americans.

The company has 7,000 employees in the US, has two global offices (Los Angeles and Singapore) and nine other offices in cities around the world, but none in China. There are important offices in Paris, London, New York, Tokyo and Jakarta).

ByteDance’s structure is complex, and it is not known whether, in the event of a possible sale, TikTok’s US operations could be completely “broken” by what TikTok has in the world, as this would mean, at least in theory, that the new US version could no longer use complex algorithms , which made TikTok such a huge global success.

It’s understandable that many TikTok creators and a large number of users are unhappy with the potential ban, and many can’t believe that such a popular app can be banned in the America of 2024.

Why many say banning TikTok in the US would be a bad idea

There are many voices, especially among press observers, who say that pushing to ban TikTok is a bad idea.

There would be several reasons, but one of them is that if TikTok was bought by an American company, that American company would have access to the data of tens of millions of users and therefore would have enormous power and influence.

Other voices against the “madness” directed at TikTok explain that it needs to be analyzed in detail and determine exactly what constitutes a threat to national security, starting with concrete examples.

There are those who say the US had more pressing issues than spending a lot of time banning the most popular app among teenagers, an app that many people actually love and knew how to appeal to young people, while Facebook has an older audience.

TikTok: We are a global company, not a Chinese company

​”We ​​are not a Chinese company, we are not pressured in any way by the Chinese authorities regarding data or content moderation,” said an official representative of TikTok Europe in March 2023. Faced with threats of a ban in some quarters, TikTok is trying to convince officials in the US and Europe that user data cannot find its way to Beijing. But it will be difficult, because the ties with Chinese PR are strong.

“The relationship between TikTok and ByteDance is similar to the relationship between YouTube and Google. ByteDance is the parent company, we say it’s a global company, I know some call it a Chinese company. 60% of ByteDance shares are owned by global investors who also have stakes in other technology companies with which we compete. 20% of shares are owned by employees, and another 20% belong to the founders of the company,” explained the representative of TikTok.

The company said Chinese authorities could not obtain the data of TikTok users in Europe, and TikTok said it would flatly refuse any such requests. The company also said that there is no pressure from Chinese authorities to access data or moderate content. “We are an independent global company.”

TikTok officials claimed that the app collects less personal data than other tech apps.

Sources: Financial Times, Reuters, Washington Post, The Guardian, TechCrunch, New York Times

Photo source: Dreamstime.com