 "China may be willing to allow TikTok sale, says private companies can make their own decisions")
On Monday, the Chinese Foreign Ministry made a notable shift in its stance on TikTok, saying that private companies, like ByteDance, can make their own decisions regarding the sale or merger of their assets. This marks a reversal from its previous position, which opposed the idea of ByteDance selling TikTok’s US operations to a foreign buyer, as per a report by Axios.
This new development is significant because it comes at a time when US law requires ByteDance to either sell or divest TikTok’s US arm to avoid a ban. Until now, China had been reluctant to allow the sale, which had left ByteDance in a difficult position as it faced mounting pressure to comply with US regulations.
China’s statement and its implications
In her remarks on Monday, Chinese foreign ministry spokeswoman Mao Ning stated that corporate decisions like mergers and acquisitions should be made independently by companies based on market principles.
She also emphasised that Chinese companies involved in such activities must comply with Chinese laws and regulations. This marks a shift towards a more hands-off approach by the Chinese government, giving ByteDance more autonomy in navigating the future of TikTok in the US.
US law and TikTok’s future
The legal situation surrounding TikTok remains complicated. The US Supreme Court recently upheld a law that requires TikTok to divest from its Chinese parent company, ByteDance, in order to avoid a ban in the US The law was framed to protect US national security by preventing China from having control over TikTok’s algorithm and user data. US lawmakers remain divided on whether to extend the deadline for TikTok to comply or to enforce the ban if a deal isn’t made.
Former President Donald Trump has indicated that he may grant a 90-day extension for TikTok, suggesting a potential 50 per cent joint ownership venture with a US company. However, any deal would need to adhere to the legal requirements, including ensuring that ByteDance remains uninvolved in TikTok’s operations moving forward.
Problem with TikTok’s valuation
Billionaire Frank McCourt, who is leading a bid to purchase TikTok’s US operations, has reportedly committed $20 billion in capital to the effort. Along with him, there are several other tech businesses and tech billionaires vying to take over TikTok. Reports have also suggested that Elon Musk may be a serious contender as well. While there are challenges in valuing TikTok’s US arm separately from ByteDance, estimates place its worth between $20 billion and $100 billion. McCourt’s team has expressed confidence that their proposal would comply with the Supreme Court’s recent ruling.
As the situation continues to unfold, the future of TikTok in the US hinges on a complex mix of legal requirements, business decisions, and international relations.
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