Chinese officials are in preliminary discussions about the possible sale of TikTok’s US operations to billionaire Elon Musk. According to Bloomberg News, Chinese officials are in preliminary discussions about the possible sale of TikTok’s US operations to billionaire Elon Musk.
The discussion is part of a wider preparation for working with the incoming Trump administration, although Beijing still prefers to keep TikTok under ByteDance’s control. The dominant scenario envisions TikTok USA merging with Musk’s X platform, creating a social networking giant.
With over 170 million US users, the deal would dramatically boost X’s presence in the advertising market, while also giving Musk’s xAI company access to an invaluable amount of user behavioral data. Musk, with an investment of more than $250 million in Trump’s election campaign, is emerging as a strategic ally of the incoming administration.
The billionaire has come out publicly in favor of keeping TikTok in the US, stressing that banning it would hurt freedom of expression, even though it would benefit the X platform. The Chinese government holds a “golden share” in ByteDance through a subsidiary, although the company insists this does not affect its international operations.
Chinese laws strictly prohibit the sale of software algorithms to foreign companies, making Beijing’s approval a prerequisite for any deal. TikTok’s US operations are valued at between $40 billion and $50 billion. The amount worries even the world’s richest man, as Musk continues to pay off $44 billion in loans from the Twitter acquisition. Within ByteDance, the Musk candidacy is viewed positively because of Tesla’s successful presence in China.
The company’s factory in Shanghai, the world’s largest as of 2019, demonstrates the entrepreneur’s ability to work effectively with the Chinese government. The US Supreme Court, after hearings on January 10th, appears to be leaning towards approving legislation that would force TikTok USA to be sold or shut down by January 19th.
Trump has already asked for a deadline extension to negotiate an alternative solution. At the same time, the possibility of transferring American users to a new application with a different identity is being considered, although the viability of this strategy is strongly questioned by market experts. The future of TikTok is expected to have a decisive impact on the broader US-China relationship in the technology sector, particularly on issues of trade tariffs and technology export controls.
The company employs more than 7,000 people in the US, with annual revenues exceeding $15 billion from its US operations.
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