Experts: China’s TikTok More Likely to Face Ban than Complete Sale in Time

TikTok Ban
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Alana Mastrangelo

The legislation recently passed by the House of Representatives regarding China’s TikTok app gives its parent company ByteDance six months to sell the social media platform before it faces a ban in the United States. Experts say that a sale in that short of an amount of time is unlikely.

Financial experts say the House bill prompting a forced sale of TikTok could be one of the most complicated transactions in corporate history, and poses financial, technical, and geopolitical challenges that make the sale unlikely, and thus, increase the probability of the app being banned in the United States, according to a report by Washington Post.

Banning TikTok might be easier than getting ByteDance to sell the app, given that a sale would require the Chinese tech giant severing from its technical backbone and potentially faces legal challenges from the Chinese Communist Party, which said it would block any deal, experts say.

Shou Zi Chew, chief executive officer of TikTok Inc.  Photographer: Bryan van der Beek/Bloomberg via Getty Images

“As we would say in the business, the amount of hair on the transaction is so extreme,” Lee Edwards, a former mergers and acquisitions partner at the law firm Shearman & Sterling, said, using a term of art referring to a complicated deal with unknown twists and turns.

Moreover, a buyer would need to devote “huge amounts of management and strategic planning resources — with a high risk of failure,” Edwards added.

One financial analyst estimates that TikTok would probably sell for more than $100 billion, meaning that very few buyers would be able to pull off a purchase. And a tech giant trying to buy the app would likely face heavy antitrust scrutiny in multiple counties, slowing the process down even more and potentially halting it altogether, financial experts add.

“There is a very short list of bidders here,” David Locala, former head of global technology mergers and acquisitions at Citi, said, adding that U.S. regulators may “have to pick their poison: Do they want U.S. ownership of TikTok, or do they want one or more of the Big Tech companies to get even bigger?”

Meanwhile, Wedbush Securities research analyst Dan Ives said that a sale of TikTok in general would be subject to a number of “aggressive legal challenges” that could further cause the deal to run out of time.

Schweizer

Peter Schweizer has exposed China’s weaponization of TikTok (Photo: Budrul Chukrut/Getty Images; GAI; BNN)

“Detaching the algorithm from ByteDance would be a very complex process,” Ives said, adding that China and ByteDance “will never allow the source code to be sold to a U.S. tech company in our view, which makes this all a spiderweb issue for any potential strategic buyer.”
The communist regime has also said it would do whatever it can to stop a sale of TikTok, with China’s foreign ministry spokesperson Wang Wenbin saying the House bill was built on “robber’s logic” targeting a valuable asset.
“Beijing will object in principle to both the political circus it sees in Washington over the TikTok issue and to any forced divestiture which involves a company — being pressured entirely based on its China links,” Paul Triolo, a technology policy lead at the business consulting firm Albright Stonebridge Group, who specializes in Chinese business and economics, said.
The ByteDance technology powering TikTok is also “a critical piece of intellectual property for the company, and again Beijing would object to the precedent a forced divestiture involving AI algorithms could set,” Triolo added.
Notably, Peter Schweizer, Breitbart News senior contributor and author of the bestselling book, Blood Money: Why the Powerful Turn a Blind Eye While China Kills Americans, said on Saturday that if the House TikTok bill becomes law, ByteDance will make a profit on the sale of the app, adding that the reason the company opposes a sale “is they don’t want to give up the control and the access to our kids.”
As Breitbart News reported, both former Activision CEO Bobby Kotick and former Treasury Secretary Steven Mnuchin are looking at building an investor group to buy TikTok from ByteDance.

You can follow Alana Mastrangelo on Facebook and X/Twitter at @ARmastrangelo, and on Instagram.

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