China’s ByteDance has agreed to divest the U.S. operations of TikTok completely in a bid to save a deal with the White House.Tweet
After President Donald Trump said on Friday he had decided to ban the popular short-video app, two people familiar with the matter said on Saturday.
U.S. officials have said TikTok under its Chinese parent poses a national risk because of the personal data it handles. ByteDance’s concession will test whether Trump’s threat to ban TikTok is a negotiating tactic or whether he is intent on cracking down on a social media app that has up to 80 million daily active users in the United States.
Trump told reporters onboard Air Force One late on Friday that he would issue an order for TikTok to be banned in the United States as early as Saturday. “Not the deal that you have been hearing about, that they are going to buy and sell… We are not an M&A (mergers and acquisitions) country,” Trump said.
Some ByteDance investors that are based in the United States may be given the opportunity to take minority stakes in the business, the sources added. About 70% of ByteDance’s outside investors come from the United States.
The White House declined to comment on whether Trump would accept ByteDance’s concession. ByteDance in Beijing did not respond to a request for comment
Under ByteDance’s new proposal, Microsoft will be in charge of protecting all U.S. user data, the sources said. The plan allows for another U.S. company other than Microsoft to take over TikTok in the United States, the sources added.
ByteDance had received a proposal from some of its investors, including Sequoia and General Atlantic, to transfer majority ownership of TikTok to them, Reuters reported on Wednesday. The proposal valued TikTok at about $50 billion, but some ByteDance executives believe the app is worth more than that.
ByteDance acquired Shanghai-based video app Musical.ly in a $1 billion deal in 2017 and relaunched it as TikTok the following year. ByteDance did not seek approval for the acquisition from the Committee on Foreign Investment in the United States (CFIUS), which reviews deals for potential national security risks. Reuters reported last year that CFIUS had opened an investigation into TikTok.
In 2018, CFIUS forced China’s Ant Financial to scrap plans to buy MoneyGram International Inc over concerns about the safety of data that could identify U.S. citizens.
ByteDance was valued at as much as $140 billion earlier this year when one of its shareholders, Cheetah Mobile, sold a small stake in a private deal, Reuters has reported. The startup’s investors include Japan’s SoftBank Group Corp.
The bulk of ByteDance’s revenue comes from advertising on apps under its Chinese operations including Douyin – a Chinese version of TikTok – and news aggregator app Jinri Toutiao, as well as video-streaming app Xigua and Pipixia, an app for jokes and humorous videos.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.