TikTok Update: Who’s Bidding, Suing and Leaving

The latest update as the September 15 deadline looms

The TikTok saga continues with changes occurring almost daily. In August, President Donald J. Trump issued executive orders that could lead to the ban of short-form social video platform TikTok from the United States due to national security concerns. The first order came August 6, four days after a conversation with Microsoft CEO Satya Nadella, in which Trump asked Microsoft to consider acquiring TikTok from parent company ByteDance, which is based in Beijing. Trump also gave ByteDance 90 days to divest itself from its American assets and any data TikTok had acquired in the U.S.

Who’s bidding

Microsoft agreed to pursue a possible acquisition of TikTok’s operations in the United States, Canada, Australia and New Zealand, and the company said it might pursue other American investors to join them in the venture. Late last week, Walmart announced it was partnering with Microsoft on a possible deal worth between $20 billion to $30 billion, reports CNBC.

“We believe a potential relationship with TikTok US in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses,” Walmart said. “We are confident that a Walmart and Microsoft partnership would meet both the expectations of US TikTok users while satisfying the concerns of US government regulators.”

Oracle has also come out as a potential buyer for TikTok, reports The New York Times. They, too, may be considering additional investors, including General Atlantic and Sequoia, to help pull off an acquisition. If Oracle would buy TikTok, experts speculate they are more interested in data from TikTok that could help boost the company’s cloud, data and advertising businesses.

While there has been talk that a deal is just days away, China updated its export control rules on Friday which could impact a potential sale, says The New York Times. It seems the Chinese government wants to have a say on who buys TikTok as well as the terms of the agreement.

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Who’s suing

Last Monday, TikTok filed a lawsuit against the U.S. government, alleging it was denied due process, that the allegations against security are invalid, and that the U.S. government did not act in good faith. The social platform said they believe the administration’s decisions were “heavily politicized.” TikTok cited that it has 100 million American users, more than 1,500 employees currently in the United States, and an additional 10,000 jobs planned for U.S. workers. TikTok said it has a thriving community to which it is responsible.

“The Executive Order issued by the Administration on August 6, 2020 has the potential to strip the rights of that community without any evidence to justify such an extreme action, and without any due process. We strongly disagree with the Administration's position that TikTok is a national security threat and we have articulated these objections previously,” said TikTok in a blog post.

“Now is the time for us to act. We do not take suing the government lightly, however we feel we have no choice but to take action to protect our rights, and the rights of our community and employees,” said TikTok. “In our complaint we make clear that we believe the Administration ignored our extensive efforts to address its concerns, which we conducted fully and in good faith even as we disagreed with the concerns themselves.”

Who’s leaving

Also last week week, Kevin Mayer announced his resignation as CEO of short-form video platform TikTok and COO of parent company ByteDance, reports The New York Times. Mayer worked with the companies for less than four months. He resigned from The Walt Disney Company to take on the new roles. He cited political pressure between the United States and China as his reason for leaving. Mayer made the announcement to staff via email.

“In recent weeks, as the political environment has sharply changed, I have done significant reflection on what the corporate structural changes will require, and what it means for the global role I signed up for,” he said in the email. “Against this backdrop, and as we expect to reach a resolution very soon, it is with a heavy heart that I wanted to let you all know that I have decided to leave the company.”

Insider Take

The U.S. government has serious national security concerns, and it wants a TikTok buyer to help alleviate those concerns. Meanwhile, TikTok says “not so fast” and the Chinese government is trying to influence a deal by changing their rules midstream. We won’t try to predict what will happen next, but you can be sure that a sale will not be a simple one and it may not happen by the September 15 deadline. Whether the federal lawsuit can buy TikTok some time remains to be seen. Stay tuned for what looks to be an interesting fall. Where will it end?