Last week, U.S. President Donald Trump signed an executive order stating that the Chinese-owned social media app TikTok would be banned in 45 days if it was not purchased, at least in part, by a U.S.-run company. The app is owned by Chinese-firm ByteDance, so POTUS is looking for US involvement to ensure national security. The question is, will a deal be done before time runs out?
There have been several companies thrown around which could be interested in purchasing the social media giant: Facebook, Apple, Google, Microsoft, Twitter. Microsoft and Twitter have admitted to being in talks to purchase the app, while it seems the rest have bowed out, or at least have not made it known they are interested.
It’s plainly obvious why digital companies would be interested in purchasing the app. TikTok rose to social media prowess quickly, becoming a pop culture sensation almost overnight. It currently has over 100 million users in the US and over 2 billion downloads worldwide. According to Business Insider, “The company is now worth $75 billion, according to Pitchbook, making it the most valuable privately held company in the world.”
Trump’s executive order comes as US relations with China are more and more strained, and after weeks of intense drama surrounding TikTok. The order states, in part, “The spread in the United States of mobile applications developed and owned by companies in the People’s Republic of China continues to threaten the national security, foreign policy, and economy of the United States,” the executive order reads. “At this time, action must be taken to address the threat posed by one mobile application in particular, TikTok.” TikTok has already been banned in India, along with 58 additional Chinese-based applications. In the U.S., Congress also passed legislation banning the app from all government phones.
If the company wants to avoid a U.S. ban, it must sell. China has long been known to use applications to spy and ferret information from users in other countries, but TikTok’s quick rise to fame is causing national security concerns in a variety of countries.
Microsoft is the frontrunner in the buyout, looking to spend $10-$30 billion, depending on how much of TikTok the company agrees to take on. Many are surprised by Microsoft’s interest in the app, and Bill Gates called the deal a “poisoned chalice.” Microsoft is not in the social media game, they’re in the business of software and security. But, at a worth of $1.6 trillion, they can certainly afford it.
Twitter’s interest is newer, their negotiations not quite as far along. Twitter is worth a mere $29 billion, so raising the capital for such a purchase will be more difficult. Although it would be more apt for Twitter to land TikTok considering its own prowess in social media. It’s not the first time, Twitter purchased a startup called Vine in 2012, which was a short video application. Vine was shut down in 2016, though. Adding to the appeal of already being a social media giant, Twitter’s size may actually be an advantage because it won’t be subjected to the same level of antitrust scrutiny as Microsoft.
Really, though, it doesn’t matter which company purchases TikTok, only that it happens by the deadline. Microsoft has the capital and is further along in negotiations with the company, but Twitter is more likely to keep its current success rate going. In the end, if neither company purchases all or part of TikTok, the app will be banned in the U.S. It’s impossible to tell if a deal will get done in time, but it is certain that ByteDance wants to see it happen. Any creator of a product wants to see that product succeed, even if it’s not at their own hands.
Additional food for thought: Even if a deal is not done and Trump’s order goes into place, it’s unclear if his order will withstand legal processes bound to follow.