Finding a Buyer for TikTok May Not Be So Easy

TikTok has what many Silicon Valley companies lust after: A culture-making machine beloved by 100 million Americans and deep-pocketed advertisers.

That doesn’t mean they will line up to buy it.

TikTok said on Wednesday that the Biden administration was pushing the company’s Chinese owners to sell the app or face a possible ban. But there are probably few companies, in the tech industry or elsewhere, willing or able to buy it, analysts and experts say.

At a price of $50 billion or more — the value some analysts said TikTok could command — the social media platform would be too expensive for many companies, including competitors like Snap. The tech giants that could afford it, such as Facebook owner Meta, Google and Microsoft, are likely to shy away for fear of getting caught in years of antitrust scrutiny in the United States. Then there’s the headache of owning a social media company, and figuring out how to handle the endless flood of toxic content.

In addition, it remains unclear how TikTok would fully unravel itself from ByteDance, its parent company in China, or whether any deal would be approved by the Chinese government.

TikTok “has a lot of baggage, and that baggage means that it’s hard to make this a reality,” said Brian Wieser, an independent consultant who focuses on the media and advertising industries.

There may be other options, such as a private equity company swooping in with an offer with a partner, or ByteDance spinning off TikTok into a stand-alone public company. But if there are a limited number of potential suitors it may complicate the White House’s efforts, and continue to drag out what has already been a yearslong battle between Washington and the company.

TikTok has been in the cross hairs of both the Trump and Biden administrations, both of which have said that the app poses a national security threat. Lawmakers have been increasingly concerned that TikTok could put sensitive user data, like location information, into the hands of the Chinese government. They have pointed to laws that allow Beijing to secretly demand data from Chinese companies and citizens for intelligence-gathering operations.

More than two dozen states have issued bans of the app on state-owned devices, and several pieces of federal legislation are also aimed at banning TikTok.

John F. Kirby, a spokesman for the National Security Council, declined to comment on Thursday about whether the administration was pushing ByteDance to sell TikTok. But he said that “we have legitimate national security concerns here, and outside of all that, we continue to support bipartisan legislation that’s designed to address those security concerns posed by certain foreign-owned consumer apps.”

Better Understand the Relations Between China and the U.S.

The two nations are jockeying for influence on the global stage, maneuvering for advantages on land, in the economy and in cyberspace.

TikTok said this week that it was weighing its options and that a security proposal it offered the government in August offered the best protection for American users. Under the proposal, the company would spend more than $1.5 billion to cordon off access to sensitive U.S. user data and offer oversight and transparency around its content recommendations.

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The company’s chief executive, Shou Zi Chew, who is Singaporean, is scheduled to testify before the House Energy and Commerce Committee next Thursday. Lawmakers are expected to question him about the app’s ties to China and the content it delivers to young people.

Maureen Shanahan, a spokeswoman for TikTok, said in a statement: “If protecting national security is the objective, divestment doesn’t solve the problem: A change in ownership would not impose any new restrictions on data flows or access.”

A host of technology companies declined to comment or did not respond to requests for comment on Thursday about their interest in buying TikTok, including Apple, Amazon, Google, Meta, Microsoft and Twitter.

The Biden administration’s push for a sale mirrors the effort by the Trump administration three years ago. At that time, Mr. Trump threatened to ban TikTok from Apple and Google’s app stores unless the app was sold to an American company. A group of federal agencies that review national security concerns related to foreign companies, known as the Committee on Foreign Investment in the United States, or CFIUS, had recommended such a move.

Possible buyers for the app included Microsoft and the cloud computing company Oracle. But the Chinese government issued export restrictions in August 2020 that potentially allowed Beijing to block a sale. While Oracle and Walmart ultimately seemed to reach an agreement to buy stakes in the app, resolving Mr. Trump’s concerns, the deal never closed.

Multiple federal courts later ruled that Mr. Trump did not have the authority to ban the app, limiting the government’s leverage in the case. (Oracle has since been working with TikTok to help it store U.S. user data in domestic servers and has been a key partner in its plan to assuage national security concerns.)

When President Biden took office, the administration initially focused on negotiating a deal through CFIUS with TikTok that would settle the concerns without a forced sale. The company assumed its talks would resolve soon after it submitted a 90-page proposal to the administration in August, but its efforts have been stymied by several revelations around how ByteDance and TikTok have mishandled U.S. user data.

And now, any potential sale looks even more complicated than before.

“It’s much more fraught on all levels on the economics of it,” said Glenn S. Gerstell, senior adviser the Center for Strategic & International Studies and the former general counsel of the National Security Agency. “TikTok now has two years of user growth, it’s far more entrenched in terms of its position in American social media, and clearly the tensions with China have greatly increased.”

Antitrust officials at the Justice Department and the Federal Trade Commission are increasingly concerned about attempts by tech giants to buy other companies. The F.T.C. unsuccessfully challenged Meta’s acquisition of a small virtual reality start-up and is trying to block Microsoft from buying the video game powerhouse Activision Blizzard.

“I think the whole concern with tech platform dominance would be a factor in what buyer or buyers would be acceptable,” said William J. Baer, a former head of the Justice Department’s antitrust division. “A tech platform would legitimately have to think about the antitrust risk of buying something that, while not directly a competitor, would be seen as expanding the dominance of that platform in the tech space.”

The uncertainty around TikTok’s future has been felt by its U.S. employees, who are spread among locations including Los Angeles, the Bay Area, New York and Washington. Morale at the company has waned as state bans and legislation targeting TikTok have gained traction, according to three employees who spoke on the condition of anonymity.

TikTok leaders briefly addressed a potential divestment during a companywide livestream on Tuesday, where executives told employees that a divestment would not address the U.S. government’s concerns, according to two of the employees.

In an internal note sent after news broke about the Biden administration’s push, Michael Beckerman, TikTok’s head of public policy for the Americas, called the Biden administration’s push a “developing situation” and said that “divestment doesn’t solve anything” if protecting national security is the objective. He added that the company’s strategy to build systems to store U.S. user data on U.S.-based servers monitored by a third party “remains the same.”

“We feel strongly that this conversation should include the industry at large and not be based on where a company was founded," Mr. Beckerman wrote.

Ryan Mac and Michael D. Shear contributed reporting.

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