TikTok has been a controversial social media platform since its launch, with politicians raising privacy and security concerns over the fact that it is owned by a Chinese company.
Its parent, ByteDance, has denied any claims that it shares information with the Chinese government or that there are privacy concerns, but a ban now appears more likely than ever.
A bill calling for its ban in the United States was approved by the House of Representatives with an overwhelming majority and will now go to the Senate. If it is approved in the Senate, Joe Biden has said he would sign the bill which would lead ByteDance to have to close its operations in the United States.
But can the platform be saved? The problem is not TikTok itself but its ownership, so if ByteDance found an American buyer for the brand, then the dance could continue, but who?
Sell directly to a US company
There is no guarantee that ByteDance will agree to sell the entire TikTok brand and platform to a US company. The vast majority of TikTok users are located outside the country, but it earns significant revenue in the United States, primarily through its TikTok store business.
It is clear from the hearings and speeches that American politicians will not accept a compromise in which someone else operates TikTok but overall ownership remains with ByteDance.
However, ByteDance is also unlikely to abandon its business outside the United States. It would also have to obtain approval from the Chinese government for any sale, which may be difficult to achieve.
License the trademark to an American company
One solution could be a franchise agreement, where we have two TikToks: the US version owned by a US company that licenses the rights to the brand, the algorithm and the app, as well as all the code and control over your role, and then a global franchise agreement. version owned by ByteDance.
This could be very confusing and it’s unclear if the two systems would ever be interoperable, meaning US users would be isolated and unable to see global creators, but it would allow the platform to continue as a business in operation in app stores. and even online.
It’s also something that already happens with Douyin, a TikTok-like platform owned by ByteDance, built with the same underlying technology but only available in China. There is also no link between it and TikTok. There could be a similar deal with US and global TikTok.
Who could license TikTok in the US?
Assuming ByteDance can get over the hurdle of Chinese government approval and agree to a licensing or profit-sharing deal to create TikTok in the US, it won’t want to sell to an existing social media company as it would mean giving up its sauce. secrets a global rival. .
Oracle is a potential player in this space. The enterprise technology company was previously on the short list, along with Walmart, of potential buyers for the social video platform.
Oracle has its own cloud platform that could host video content and services and does not have an existing social media network that would satisfy ByteDance’s competition concerns.
Under the deal previously negotiated by Donald Trump, Oracle would have been responsible for hosting all TikTok user data in the US and protecting computer systems within the US, but the sale never came to fruition as it was based in a Trump executive order that was stopped in court. of the 2020 presidential election and then fell.
Creating a new company on TikTok US
One solution is to avoid a sale, but create TikTok US as an independent company with its own shares sold to US buyers, but still connected to the broader TikTok platform.
Under this suggestion, it would give ByteDance a reduced stake and no voting control. This could fit within the new bill’s rules requiring ByteDance to have no operational control over the company in the US if it were to continue with some degree of ownership.
Even a small stake in TikTok, which is one of the largest social media apps in the US, would cost billions, reducing the number of potential buyers. But the price may drop as the deadline approaches and ByteDance has the option of losing everything or making some revenue.
Selling any major stock to a big tech company would create antitrust issues, so one option could be to opt for an initial public offering (IPO). The problem with this is that tender offers take a long time and the House of Representatives has given them six months to complete the pestment.
This all assumes that ByteDance gets approval to sell any part of its business to an American company and is not completely blocked by the Chinese government. It also assumes that the company does not take the hit and refuses to sell the capital, accepting the ban and leaving the United States.
Could I come back in the future?
There is significant support, particularly from younger people, for TikTok to remain. Some users consider it a more independent news platform than others, and it has helped millions of creators start businesses without relying on Google or Facebook.
If TikTok is banned in the US, it won’t go away completely. It will continue to exist globally with over a billion users in places like the UK and Europe. While it won’t be available in US app stores, it can still be downloaded on Android or accessed as a web app using a VPN.
I think an agreement is likely to be reached, even if it were necessary to negotiate an extension of the 180-day deadline imposed in the bill. The question is what form that will take.
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