TikTok will have to sell its American business and cut all ties with China, if it does not want to be blocked by the United States. That was the warning that the White House recently issued against ByteDance, the parent company of the popular video application, according to reports. The Wall Street Journal.
The aforementioned media indicates that the ultimatum was reported to the Chinese company through the Committee on Foreign Investment in the United States (CFIUS), which belongs to the US Treasury Department. Everything points to that security review would have been abandoned that multiple agencies were carrying out to banish the interference of the Asian giant on the app. And that there would be no intention of retaking it.
At TikTok they cannot say that the threat from the United States is a surprise. Yesterday it was learned that the social network was willing to sell its business in that country or go public. However, it was made clear that both They were options of last resort.. In the first instance, it was intended to convince the Joe Biden administration about the feasibility of Project Texas.
The latter consists of “walling off” the data of TikTok users in the United States, storing and managing it in a structure in the Oracle cloud. Larry Ellison’s firm would also be in charge of controlling that information is not transferred from it without authorization. While an independent board selected by the US government would oversee its overall operation. The project has already been debated for months, but the hardening of criticism against the app would lead to its final rejection.
For now, TikTok maintains that there is no better alternative than Project Texas to keep US data protected. The company affirms that the level of security of this proposal exceeds that of any other North American company that handles sensitive information of its users. It is estimated that the video app has invested more than 1.5 billion dollars to build this structure.
The United States demands the sale of TikTok
As reported Bloombergthe next step for CFIUS would be to initiate a process to find and approve a buyer of the US TikTok business. A procedure that would be much more complex than it would appear at first glance. It is that the hypothetical next owner of the video app would be forced to rebuild platform algorithm to avoid any possibility of espionage by China.
If this possibility advances, the report ensures that there would already be several interested in getting their hands on TikTok. Anyway, no specific names are mentioned. Let’s not forget that the possible purchase of the social network was one of the great soap operas of 2020, when Donald Trump also wanted to veto it. By then, corporations like Microsoft, Oracle and even Twitter, appeared on the scene to try to close the deal. But none made it.
On the ByteDance side, tempers would be quite heated. The company would even analyze sue usa if you persist with the “sell or block” position. In addition, facing a TikTok divestment process would not be so simple, since China would also have to give its approval.
Currently, 60% of ByteDance’s shares are owned by global investors. While 20% are owned by their employees, and the remaining 20% is in the hands of the company’s founders, led by Zhang Yiming and Liang Rubo. Although the voting rights of the latter are greater than those of the other shareholders.
If TikTok cuts ties with its Chinese parent, it’s estimated that its US business could be worth between 40,000 and 50,000 million dollars.