Reuters reported on Wednesday, citing its sources, that potential buyers of TikTok are discussing four ways to structure an acquisition deal from its Chinese owner, ByteDance, which includes buying its operations in the United States without its algorithm, after Beijing took a step to block a deal It may be worth $ 30 billion.
Other options being considered include seeking Chinese approval to pass the app’s algorithm to the acquirer of US assets for the short video application, licensing the algorithm from ByteDance, or seeking a transitional period with the US National Security Council overseeing the deal, three sources said.
ByteDance was looking to select a buyer for Tik Tok assets by this week so that it could strike a deal by mid-September and comply with President Donald Trump’s order to block it, after US officials raised concerns about the safety of the personal data of US citizens that it owns. Tik Tok.
A TikTok spokeswoman said in a statement, “Tik Tok is loved by 100 million Americans because it is the home of entertainment, self-expression and communication.” “We are committed to continuing to delight families and meaningful careers for those who build 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 about whether it will veto a deal and give potential buyers Microsoft and Oracle to 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 have to find an alternative quickly.
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 if 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.