TikTok likely to nail compromised sale deal or choose a 'multi-party' loss situation: experts

By Zhang Hongpei Source: Global Times Published: 2020/9/14 14:28:40 Last Updated: 2020/9/14 18:30:40

A logo of the video-sharing social networking company TikTok's Los Angeles Office Photo: Xinhua



As the deadline set by the Trump executive order threatening closure of Chinese video-sharing platform TikTok draws close, it is likely that TikTok's Chinese owner ByteDance would choose partnership or partial sale to a US firm instead of a wrapped-up buyout that includes its core algorithm technologies, experts told the Global Times on Monday.

If the compromised option still cannot address the Trump administration's data security concerns and the latter continues its relentless clampdown on the Chinese firm, the possibility that ByteDance would give up TikTok sale plan cannot be ruled out, they added.

In an official announcement, Microsoft, a potential US buyer with high hopes, said, "ByteDance let us know today they would not be selling TikTok's US operations to Microsoft," according to a Microsoft blog on Sunday. "We are confident our proposal would have been good for TikTok's users, while protecting national security interests," Microsoft said.

"The Microsoft statement comes unexpectedly, and suggests that ByteDance has nearly reached a deal with other buyers or nailed down a plan that does not have Microsoft involved," said Liu Xingliang, director of the Beijing-based Data Center of China Internet.

Microsoft might want to continue purchase talks with ByteDance by issuing such a statement in an unexpected way, Liu told the Global Times on Monday.

ByteDance did not respond to a request for comment by the Global Times as of press time.

China firmly supports ByteDance's legal rights and interests, the Chinese Foreign Ministry said on Monday, in response to the reported TikTok buyout.

China has repeatedly stated its position on the TikTok issue - the hunt for TikTok in the US is a typical government coercion transaction, Wang Wenbin, a spokesperson of the Chinese foreign ministry, told a regular briefing on Monday.

Apart from Microsoft, other TikTok bids came from Oracle, which Trump had endorsed, and Twitter. ByteDance's investors, including General Atlantic and Sequoia Capital, have also been vying to be part of the TikTok deal.

As clock ticks down for ByteDance to decide about TikTok's US business, Oracle Corp has won the bidding, which is set to be announced as TikTok's "trusted tech partner" in the US, and the deal is likely not to be structured as an outright sale, according to a Wall Street Journal report on Sunday, citing people familiar with the matter.

Trump said last week that the firm only has until Tuesday (September 15) to find a buyer. His August executive order set the date at September 20, if not extended.

Meng Qingbin, a professor at the Business School of the Renmin University of China, told the Global Times on Monday that a compromised deal - TikTok still keeps its core technology which is the artificial intelligence (AI) algorithms while a US firm houses all the US users' data - will be the likely outcome.

"It will address the US government's concerns on data security though the Chinese firm has repeatedly said it has not done anything related to handing data to the Chinese government," said Meng.

TikTok Photo: GT



That US firm could be Oracle given its ambition in developing the cloud computing business, or could be others, Meng noted.

"No matter in what way the deal is finalized, there is little chance that ByteDance would sell its AI algorithm technologies," said Meng, pointing out that algorithm is where the next battleground of high technologies would take place and China would not give away its advantages over US on the part.

China's Ministry of Commerce and Ministry of Science and Technology released a revised catalogue of technologies that are subject to export bans or restrictions, covering some underlying technologies related to ByteDance, including newly added article 21 about "personalized information push service technology based on data analysis" and article 18 about "AI interactive interface technology."

However, if the restructuring plan is not approved by the Trump administration, with the latter continuing to find other excuses to crack down on Chinese firms ahead of the upcoming US presidential election, there is a possibility that ByteDance would choose a "multi-party" loss situation. 

"For the firm, the $25 billion asset of TikTok would be gone; no US firms would acquire the asset; and the Trump government would be slapped on the face in a hard way," said Meng.

If it goes that far, "I think ByteDance could be in some way compensated in China," he noted.



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