Information
In a bid to address national security concerns, the Biden administration mandated last year that TikTok, owned by the Chinese company ByteDance, either be sold to a non-Chinese entity or face a ban in the U.S. Legislation signed by President Biden, which has bipartisan support, limits foreign ownership in such companies to 20% for “foreign adversaries,” including China. TikTok must divest its U.S. operations by January 19, 2025. The Supreme Court upheld this decision, but President Trump extended the deadline to April 5 for sale negotiations.
Ownership of TikTok remains largely unchanged, with ByteDance still in control; about 60% is owned by global institutional investors, while the rest belongs to the founder and employees. The U.S. Department of Justice has labelled TikTok’s founder, Zhang Yiming, a “mouthpiece” for the Chinese Communist Party, raising geopolitical concerns.
Potential buyers include Oracle, which is focusing on data security to meet U.S. regulations. President Trump has hinted at tariff negotiations to facilitate the sale, emphasizing broader trade issues with China. If a sale doesn’t happen soon, he may extend the deadline, or TikTok could be banned from U.S. app stores, affecting millions of users.
Source: FT, Reuters, BBC
So what
ByteDance seems to be testing the U.S. government’s resolve regarding a potential TikTok ban. The company likely hopes that Trump will be reluctant to provoke voters further, especially with a struggling economy and the risk of a recession on the horizon. However, it appears that Trump may still push for a sale, seeing it as an opportunity to claim a victory. Even if the app is sold, it is likely to continue posing security risks until the new owner can significantly update the app to eliminate any backdoors and transfer data storage to servers under their control.
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