TikTok-owner ByteDance is reportedly mulling a sale of the hit app as US lawmakers raise national security concerns
China Stringer Network/Reuters
TikTok-parent ByteDance is mulling options to address US regulators’ national security concerns, including a sale of its hit app, Bloomberg reported Tuesday.
The company is considering everything from legal defense of the app to selling a majority stake to financial investors, according to the report.
US lawmakers called for investigations of the app and its parent company through the fall, saying its handling of user data and censorship of content criticizing the Chinese government represent a national security threat.
TikTok’s surge in popularity helped establish ByteDance as the world’s most valuable startup, according to Bloomberg.
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TikTok’s parent company, ByteDance, is exploring options to address US regulators’ worries, including a sale of its hit app, Bloomberg reported Tuesday.
The Beijing-based company is considering everything from aggressive defense of TikTok to operational separation from the app, Bloomberg said, citing sources familiar with the talks. Selling a majority stake in the app could bring in more than $10 billion, one source said.
ByteDance’s valuation surged through 2019 as its app gained international popularity. The company is now the world’s most valuable startup, according to Bloomberg, but tensions between the US and China threaten to obstruct further growth.
The most likely sale option would be for ByteDance to offer up a majority stake in TikTok to financial investors, one source told Bloomberg. Early investors in the firm include SoftBank, Sequoia Capital, and Susquehanna International. Selling the app now would allow ByteDance to cash in on its explosive rise in popularity and avoid additional government scrutiny.
The US government has recently raised concerns around the app, claiming it represents a national security threat. The US Army launched an investigation into TikTok on November 21, saying its handling of user data puts military information and practices at risk.
Senator Marco Rubio called on the government to investigate TikTok in October, saying the app and its parent company censor material likely to upset the Chinese government, including videos criticizing the nation’s leadership or showing historical protests.
“Ample & growing evidence exists that TikTok’s platform for western markets, including the U.S., are censoring content in line with #China’s communist government directives,” Senator Rubio tweeted on October 9.
The Committee on Foreign Investment in the US, also known as CFIUS, began a review of ByteDance’s 2017 acquisition of Musical.ly, the service that became TikTok, in November.
Even Facebook CEO Mark Zuckerberg addressed TikTok’s threat to US security. The chief executive critiqued the platform for censoring users and hinted the service was undemocratic.
“While our services like WhatsApp are used by protesters and activists everywhere due to strong encryption and privacy protections, on TikTok, the China-based app growing quickly around the world, mentions of these same protests are censored, even here in the US,” Zuckerberg said in a public speech at Georgetown University in October.
Facebook tried to buy Musical.ly in the second half of 2016, but a deal never game to fruition, according to Bloomberg.
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ByteDance has considered an initial public offering as early as 2020, Bloomberg previously reported, with the company eyeing a public debut in either the US or Hong Kong. The company plans to bolster its international footprint and hire a chief financial officer before such a deal, according to Bloomberg.
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