The Sale of TikTok’s US Business Is on Hold
Plans for Sale to Walmart and Oracle Have Been Shelved
TikTok, the popular video sharing app, was preparing to sell its US operations to Oracle (ORCL) and Walmart (WMT). Now these discussions are on hold.
TikTok is owned by the parent company ByteDance, and allows users to create, share, and watch short video clips. It is powered by sophisticated AI which delivers users personalized content. This technology has led the app to surge in popularity. According to recent data, TikTok has 689 million monthly users internationally and 100 million monthly users in the US. It is valued at about $50 billion.
A Quick Review
TikTok has been caught in the crossfire as tensions between Washington and Beijing rise. In the fall of 2020, former president Trump signed an executive order labeling TikTok as a national security threat. Then, with another executive order, the former president threatened to ban the app in the US unless it sold its US operations to a domestic company. The Trump administration was concerned that the Chinese government would have access to Americans’ data collected via TikTok, and that this would pose security risks.
A number of US buyers scrambled to be part of the TikTok deal last fall. Microsoft (MSFT) was looking like a front runner, but ultimately Oracle and Walmart came out ahead. Now, though a sale of TikTok’s US business could still take place, it will likely look different than the agreement proposed in September.
The Biden Administration’s Plans
The Biden administration is conducting a review of potential security risks related to China-based tech companies. The plan to require TikTok to sell its US operations has been shelved for the time being.
White House Press Secretary Jen Psaki said yesterday, “I will note, broadly speaking, that we are comprehensively evaluating the risks to US data including from TikTok and will address them in a decisive and effective fashion.” TikTok’s many users, as well as leaders in the US social media landscape, will be anxious to see how the Biden administration’s decisions impact TikTok’s future in the US.
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