Plan to sell TikTok to Musk being considered

SOCIAL MEDIA

Chinese officials continue to focus on fighting the app’s ban in U.S.

Participants hold signs in support of TikTok outside the U.S. Capitol in March. Elon Musk might be an option to keep Tiktok running in the U.S. ANNA MONEYMAKER — GETTY IMAGES/TNS

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By Bloomberg News

Bloomberg

Chinese officials are evaluating a potential option that involves Elon Musk acquiring the U.S. operations of TikTok if the company fails to fend off a controversial ban on the short-video app, according to people familiar with the matter.

Beijing officials strongly prefer that TikTok remains under the ownership of parent ByteDance Ltd., the people say, and the company is contesting the impending ban with an appeal to the U.S. Supreme Court. But the justices signaled during arguments on Jan. 10 that they are likely to uphold the law. Senior Chinese officials had already begun to debate contingency plans for TikTok as part of an expansive discussion on how to work with Donald Trump’s administration, one of which involves Musk, said the people, asking not to be identified revealing confidential discussions.

A potential high-profile deal with one of Trump’s closest allies holds some appeal for the Chinese government, which is expected to have some say over whether TikTok is ultimately sold, said the people. Musk spent more than $250 million supporting Trump’s reelection, and has been tapped for a prominent role in improving government efficiency after the Republican takes office.

Under one scenario that’s been discussed by the Chinese government, Musk’s X — the former Twitter — would take control of TikTok U.S. and run the businesses together, the people said. With more than 170 million users in the U.S., TikTok could bolster X’s efforts to attract advertisers. Musk also founded a separate artificial intelligence company, xAI, that could benefit from the huge amounts of data generated from TikTok.

Chinese officials have yet to reach any firm consensus about how to proceed and their deliberations are still preliminary, the people said. It’s not clear how much ByteDance knows about the Chinese government discussions or whether TikTok and Musk have been involved. It’s also unclear whether Musk, TikTok and ByteDance have held any talks about the terms of any possible deal.

Musk and his representatives did not respond to a request for comment. Musk posted in April that he thinks TikTok should remain available in the US. “In my opinion, TikTok should not be banned in the USA, even though such a ban may benefit the X platform,” he wrote on X. “Doing so would be contrary to freedom of speech and expression. It is not what America stands for.”

Chinese Foreign Ministry spokesman Guo Jiakun declined to comment on the story during a regular press briefing Tuesday, referring reporters to Beijing’s previous statements on the matter. The country’s government had earlier denounced US attempts to ban TikTok and force a sale, calling them “economic bullying” and “plundering.”

The Cyberspace Administration of China and China’s Ministry of Commerce, government agencies that could be involved in decisions about TikTok’s future, didn’t respond to requests for comment. “We can’t be expected to comment on pure fiction,” a ByteDance representative said.

The talks in Beijing suggest that TikTok’s fate may no longer be in ByteDance’s sole control, said the people. Chinese officials recognize they will face tough negotiations with the Trump administration over tariffs, export controls and other issues, and they see the TikTok negotiations as a potential area for reconciliation, they said.

The Chinese government holds a so-called golden share in a ByteDance affiliate that gives it influence over the company’s strategy and operations. TikTok maintains that the control only applies to the China-based subsidiary Douyin Information Service Co., and has no bearing on ByteDance operations outside China. Still, Beijing’s export rules prevent Chinese companies from selling their software algorithms, like the one integral to TikTok. Because the Chinese government would have to approve of a sale that includes TikTok’s valuable recommendation engine, it has a significant voice in any possible deal.

TikTok’s U.S. operations could be valued at around $40 billion to $50 billion, Bloomberg analysts Mandeep Singh and Damian Reimertz estimated last year. That’s a substantial sum even for the world’s richest person. It’s not clear how Musk could pull off such a transaction, whether it would require the sale of other holdings, or whether the U.S. government would approve. He paid $44 billion for Twitter in 2022, and is still paying off sizable loans.

Musk has a positive reputation among many ByteDance employees in China, according to a person familiar with the matter. He is seen as a very successful entrepreneur, who has experience engaging with the Chinese government through his Tesla Inc. business, the person added.

ByteDance’s leaders have said their priority is to fight U.S. legislation that requires the Beijing-based company sell or shut down the U.S. operations because of national security concerns. TikTok’s lawyers have argued the legislation violates free speech laws under the Constitution’s First Amendment.