Will the 3 month tug-of war on Tik Tok ban end with IPO in the US?
Last month the U.S. President Donald Trump had ordered ByteDance to divest TikTok amid the increasing security concerns of the millions of Chinese app users. The risk is that of the personal information of the users falling into China’s Communist Party’s hands.
ByteDance is planning an initial public offering of TikTok Global (the proposed new company for the popular short-video app), should the government in the United States give its approval to the plan. The leadership at the US also remains unwavering in its decision of opposing ByteDance’s majority ownership of TikTok, as was again stressed by Trump.
As a result, ByteDance is frantically racing to string an agreement that will head off the ban as President Trump has threatened to pull the plug as early as next week.
However, as people close to the matter have reportedly informed that the White House and ByteDance have agreed to a term sheet on some aspects of a deal, subject to President Trump’s consideration.
According to some of the available details, the new company, dubbed as TikTok Global, would need to have a majority of American directors, including a chief executive who is a US citizen, along with a security expert to monitor ongoing activities closely.
Given how the saga has unfolded, one still cannot be absolutely certain about whether President Trump will sign off on the agreement. Also shrouded in doubt are what assets TikTok Global would own beyond the app’s assets in the US. From their side though, ByteDance has offered to create as many as 25,000 new jobs in the US to further secure Trump’s blessing for a deal.
The US administration is said to be adamant that the board of TikTok Global include a National Security Director, vetted by the US and a separate security committee to oversee the protection of user data. The term sheet will still grant Oracle the right to inspect TikTok’s source code to include stringent provisions to ensure data security, with data to be housed in the mainland by Oracle.
With as many as 40% Americans backing Trump’s threat to ban TikTok if not sold to a US buyer, helmed by a hell-bent President to impose sanctions, we have certainly not seen the last of ByteDance’s offerings. While the White House will continue probing the details of the detail, the onus is on ByteDance to protect a critical market using whatever means it can.
Now, the ball is back in China’s court as the Oracle TikTok partnership agreement is yet to get a nod from Chinese authorities. It would be interesting to see will the three month long tug of war ends with a win-win situation for all, or China will revert back with some kind of response that could strain the tie further.
With Microsoft’s offer shot down by Bytedance, Oracle will go on to eventually own a 20% stake in the company. Not just Oracle, but if Walmart’s negotiations of acquiring a stake also bear fruit, it would be gifted with a seat at the board table.
The proposed IPO of TikTok would be one of the tech sector’s biggest-ever stock market debuts, especially on the back of the fact that the app has been valued by ByteDance investors at more than $50 billion. The filing of the IPO on the US stock exchange is expected to come about in a year.
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