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Pendulum swings in US-TikTok deal

  • Multi Asset
  • TMT
  • North America

2020 has been a rollercoaster for TikTok. In Q1 this year the video-sharing platform had the most global downloads ever recorded by an app: 315 million across the App Store and Google Play*. TikTok’s short-form content provided a welcome distraction from lockdown life and the four-year-old brand quickly became a household name. Then, after riding a crest of global popularity, its Chinese parent, ByteDance Ltd., became embroiled in what has been described as a “tech cold war” between the US and China.

US President Donald Trump claimed that TikTok is a threat to US national security because it collects huge volumes of user data that could in theory be accessed by the Chinese state. An executive order then required ByteDance to sell TikTok’s global operations (outside China) to a US company or face being banned from operating in one of the world’s biggest markets. TikTok, which rejects Mr Trump’s claims, has said, among other things, that the order is a misuse of the International Emergency Economic Powers Act. 

Weeks of intense speculation regarding potential buyers included Microsoft, which seemed like the early favourite; Twitter, which seemed too small to make such a deal; Oracle, whose initial interest seemed puzzling because of the company’s operational focus on databases and applications rather than videos and social media; and Walmart, which also initially didn’t make much sense given its focus on e-commerce. Last week, a “blessing” was given to ByteDance’s proposed deal with Oracle and Walmart. 

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