The Chinese authorities intend to prevent the forced sale of TikTok by limiting this opportunity for the platform owner, ByteDance. The Chinese government has criticized the US for trying to ban TikTok, but at the same time has made it clear to ByteDance that it would prefer a ban on the app in the US rather than selling it. This puts the company in a difficult position – the short-video platform could lose its largest market of 170 million users.
On Wednesday, the US House of Representatives overwhelmingly approved a bill that would require ByteDance to sell TikTok or face the platform being blocked in the US as a threat to national security. TikTok is accused of collecting data from American users and potentially sharing it with the Chinese government. The bill has yet to win approval in the US Senate, but it may not be so easy – according to political spending tracking platform OpenSecrets, ByteDance increased its lobbying spending by 77% last year, bringing it to $8.74 million – the most money came from the Senate.
The Chinese government has previously emphasized that since the sale of TikTok involves a technology transfer, ByteDance will have to obtain government approval. Last Thursday, a spokesman for the People's Republic of China's Ministry of Commerce called on the US to “stop unreasonable pressure” on TikTok and added that ByteDance must “strictly comply with Chinese laws.”
“Politicians in Beijing see the bill as an attempt to squeeze out a valuable asset and will not tolerate such treatment,” said Tom Nunlist, a technology policy analyst at Shanghai-based consultancy Trivium China. According to him, if US lawmakers succeed in blocking TikTok, a similar fate may await other Chinese companies.
“It is likely that China's senior leadership will choose national pride over ByteDance's financial interests,” Gabriel Wildau, managing director at consultancy Teneo, wrote in a letter to clients.
The bill to block or sell TikTok has not yet been adopted, but the former head of Activision Blizzard Bobby Kotick and the former head of the US Treasury Steven Mnuchin have already become interested in buying the company. The deal is valued at more than $100 billion, while TikTok's revenue last year was only $20 billion – but what's more important is that the company never became profitable. ByteDance founder Zhang Yiming did not report negotiations to buy TikTok.
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