ByteDance is poised to miss US deadline for TikTok sale
- TikTok owner ByteDance has been told by Beijing that any deal must be submitted for approval with detailed information about technical and financial issues, and the review will be substantial and take time
- Microsoft and Oracle remain interested in buying TikTok’s US business, despite Beijing’s involvement
ByteDance probably needs beyond the US executive order ban on September 20 to nail down an agreement with either party because of the regulatory review, said the people, asking not to be identified because the matter is private.
In preliminary talks with Chinese government officials, ByteDance has been told any proposal must be submitted for approval with detailed information about technical and financial issues, and the review will be substantial and take time, one of the people said. The officials have not been willing to give specific guidance on what kind of deal would work, the person said.
The parties are still racing to present a preliminary deal to the White House before this month’s deadline, though no agreement could be finalised before Beijing’s sign-off. It is also possible that ByteDance pulls out of a sale altogether if it determines it cannot satisfy both governments, the bidders and its own shareholders.
A representative of the Beijing-based company offered no immediate comment.
Donald Trump insists deadline for TikTok sale due on September 15
In negotiations earlier this year, ByteDance had attempted to work out a US sale that would allow it to retain a substantial interest in the American operations, but the Trump administration has pushed back on that idea.
Zhang would still like a small slice of the operation, the people said. But Microsoft and its partner in the deal, Walmart, want full ownership of the business, one person said, while Oracle’s stance is not clear.
Analysts and bankers have estimated TikTok’s US business is worth at least US$20 billion, although the price would vary widely depending on what is included with the sale. The specific offers from Microsoft, which is teaming up with Walmart, and Oracle, which has won support from venture backers such as Sequoia Capital, could not be determined.
Without any discussion or public announcement, China posted notification of new restrictions on the export of artificial intelligence technologies, including speech recognition and techniques for personalising content.
The aim of the rules is not necessarily to block a sale of the US operations, but to ensure Beijing is actively involved and to slow down the process, one person said. The review may well push finalisation of any agreement beyond the US elections in November, the person said.
TikTok’s algorithms are not a big sticking point for the bidders, the second person said. Both Microsoft and Oracle have the technical chops to build their own algorithms and would get data to fine-tune them, the person said.
ByteDance’s regulatory team and deal negotiators have discussed whether it is still possible to craft a sale that can win approval from both governments, an acquirer, venture investors and ByteDance itself.
Investment bankers have begun pitching Zhang’s team on going public in China or Hong Kong, even amid growing scrutiny in the US, and demand for initial public offerings from technology companies in the market is surging. Zhang stands to make billions no matter what happens with Trump and TikTok US.