It wasn’t immediately clear how the split would happen and what ByteDance would do with the rest of TikTok’s global operations. An announcement on ByteDance’s plans for TikTok could arrive as early as Friday, the sources said, requesting anonymity as the matter is confidential.
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Microsoft is one of the companies that have entered exploratory talks to buy TikTok, one of the sources said. Although the Redmond, Washington-based company already owns the professional social media network LinkedIn, it would face fewer regulatory hurdles to acquire TikTok than its more direct competitors, such as FaceBook Inc, the source said.
ByteDance, Microsoft and the US Department of the Treasury, which chairs the government panel that examined TikTok’s ownership of ByteDance, declined to comment.
“While we don’t comment on rumors or speculation, we are confident in the long-term success of TikTok,” TikTok said in a statement.
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Treasury Secretary Steve Mnuchin said on Wednesday that TikTok was under a national security review by the Committee on Foreign Investments in the United States and that he would make a recommendation to President Donald Trump this week.
“We’re looking at TikTok, maybe we ban TikTok, we maybe do other things or a few options, but a lot of things are happening,” Trump told reporters on Friday.
As relations between the United States and China deteriorate due to trade, Hong Kong autonomy, cybersecurity and the spread of the novel coronavirus, TikTok has become a flashpoint in the dispute between the two largest economies in the world.
Last week, the U.S. Senate Committee on Homeland Security and Government Affairs unanimously passed a bill prohibiting U.S. federal employees from using TikTok on government-issued devices. It will be taken up by the entire Senate for a vote. The House of Representatives has already voted for a similar measure.
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ByteDance has proactively considered a range of options for TikTok amid pressure from the United States to relinquish control of the app, which allows users to create short videos with special effects and has become very popular. among American adolescents.
ByteDance has received a proposal from some of its investors, including Sequoia and General Atlantic, to transfer the majority stake in TikTok to them, Reuters reported on Wednesday. The proposal values TikTok at around $ 50 billion, but some ByteDance executives believe the app is worth more than that.
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ByteDance has also reported acquisition interests in TikTok from other firms and investment firms, Reuters reported.
ByteDance acquired the Shanghai-based Musical.ly video app under a billion dollar contract in 2017 and relaunched it as TikTok the following year. ByteDance has not sought approval for the acquisition of CFIUS, which reviews the deals for potential national security risks. Reuters reported last year that CFIUS opened an investigation into TikTok.
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The United States is increasingly scrutinizing application developers about the personal data they process, especially if any of it involves the U.S. military or intelligence services. Ordering the divestment of TikTok wouldn’t be the first time the White House has taken action on such concerns.
Earlier this year, Chinese games company Beijing Kunlun Tech Co Ltd sold Grindr LLC, a popular gay dating app purchased in 2016, for $ 620 million after being ordered by CFIUS to divest.
In 2018, CFIUS forced Chinese firm Ant Financial to abandon plans to buy MoneyGram International Inc over concerns about the security of data that could identify U.S. citizens.
ByteDance was valued at nearly $ 140 billion earlier this year when one of its shareholders, Cheetah Mobile, sold a small stake in a private deal, Reuters reported. The startup’s investors include SoftBank Group Corp.
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The bulk of its revenue comes from advertising on apps for its Chinese operations, including Douyin – a Chinese version of TikTok – and news aggregator app Jinri Toutiao, as well as video streaming app Xigua and Pipixia. , an app for jokes and humorous videos.
Some of the company’s other overseas apps include the Lark work collaboration tool and the Resso music streaming app.
TikTok CEO Kevin Mayer, a former Walt Disney Co executive, said in a blog post on Wednesday that the company is committed to obeying U.S. laws and allowing experts to observe its moderation policies and review the code that governs its algorithms.
(Reporting by Echo Wang in New York and Alexandra Alper and David Shepardson in Washington, DC; Additional reporting by Nandita Bose in Washington, DC; Editing by Diane Craft, Aurora Ellis and Daniel Wallis)