Potential buyers of TikTok are discussing four ways to structure a
buyout from its Chinese owner ByteDance, Reuters reported on Wednesday, citing
its sources, after Beijing took a step to block a deal that could be worth $ 30
billion.
Other options being considered include seeking Chinese approval to
pass the app's algorithm to the acquirer of U.S. assets for the short video
app, licensing the algorithm from ByteDance, or seeking a transition period
with the U.S. National Security Council overseeing the deal, three sources
said.
ByteDance was looking to select a buyer for TikTok assets by this
week; So that you can strike a deal by mid-September and comply with the order
of President Donald Trump to block it, after US officials raised concerns
about the safety of personal data of US citizens that TikTok owns.
A TikTok spokeswoman said in a statement: “Tik Tok is loved by 100
million Americans; Because it is home to entertainment, self-expression and
communication. ” "We are committed to continuing to delight families and
meaningful careers for those growing up on our platform for many years to
come," she added.
Beijing last week updated its export control rules to restrict the
sale of technology, such as the one the app uses to recommend videos to users,
raising questions that it will veto the deal and make potential buyers -
Microsoft and Oracle - stop thinking.
The sources, who asked not to be identified, told Reuters: ByteDance and bidders for TikTok assets are now discussing four ways to
structure the deal.
The first option discussed is to sell the app without the algorithm
it uses to make recommendations to users. While this would circumvent Chinese
export control rules, it would be a big gamble for Microsoft and Oracle, which
will quickly have to find an alternative.
The sources said: The second option is to negotiate a transitional
period of up to a year with the Foreign Investment Committee in the United
States, which oversees the deal talks. However, it is not clear whether the new
Chinese rules will allow this in the required timeframe.
The third option is to seek approval from China to pass the app's
algorithm to buyers of its American assets, the sources said. This will amplify
the geopolitical risks, given the deteriorating relationships between the
world's two largest economies over trade, cybersecurity and the spread of the
coronavirus.
The sources said: The fourth scenario includes a license ByteDance for the algorithm for the purchaser of TikTok assets. Nevertheless, this may
alarm the Committee on Foreign Investment in the United States, which wants
ByteDance to abandon any relationship with TikTok in the United States.
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