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TikTok’s bizarre sale process gets even weirder

Donald Trump extends the highly politicised auction by another 75 days

Photograph: Eyevine

Photograph: Eyevine

ANYONE WANT to buy a used social network? One careful Chinese owner, 170m users in America and revenue there of $12bn last year, predicted to rise this year by a fifth. The White House is running a chaotic auction for TikTok, a Chinese-owned app that Congress has ordered to find a non-Chinese owner or else face a ban. On April 4th, on the eve of the cut-off for the app’s sale, President Donald Trump announced that he was extending the deadline by another 75 days.

America’s demand that TikTok sever ties with its Chinese parent, ByteDance, started as a principled national-security policy. It has descended into a seedy free-for-all, with Mr Trump sounding more like an influencer on a TikTok shopping channel than a statesman. Allies of the president are jostling to buy the app in a deal that may not even solve the security problems it was designed to overcome.

The debacle began on Joe Biden’s watch. Last April the then-president signed a bill mandating the app to find a buyer. Otherwise it would be removed from American app stores. Following an objection from TikTok, the Supreme Court upheld the law on January 17th. The ban was due to begin two days later, on Mr Biden’s last day in office. But, perhaps not wanting to be remembered as the president who killed America’s favourite pastime, he opted not to take action, leaving the problem to his successor.

Under Mr Trump the process has run even farther off the rails. The president has no authority to delay the ban unless a deal is well under way. But on his first day in office Mr Trump signed an executive order telling the Department of Justice not to enforce the law for 75 days. Apple and Google initially kept the app out of their stores, but allowed it to return in February. J.D. Vance, the vice-president, said only this week that a deal would be done before the deadline on April 5th. A day later Mr Trump announced that another 75 days would be needed.

The process is being run in a nakedly political way. Although both TikTok and its would-be acquirers are private companies, the White House is organising the sale. Mr Vance’s office is acting as an intermediary between the bidders and their target, as well as with the Chinese government, which in practice holds a veto over any sale by ByteDance. Mr Trump has indicated that TikTok is part of a broader negotiation with China over trade. “We could use tariffs in order to get something in return,” he said on April 3rd when speaking of the app. China’s response to Mr Trump’s tariffs—placing retaliatory levies on American goods—suggests its leaders may not see it that way.

Bids have reportedly been made by everyone from MrBeast, a YouTuber, to Tim Stokely, the British founder of OnlyFans, a porn-centric social app. Perplexity, an AI firm, has made an offer. Amazon reportedly put in a late bid in the past week. The favourite is believed to be a consortium involving Larry Ellison, a Trump ally and founder of Oracle, which already provides some of TikTok’s tech infrastructure in America, alongside Blackstone, a private-equity giant, and Andreessen Horowitz, a venture-capital firm that is also close to Mr Trump.

Exactly what kind of deal could be done is still unclear. TikTok’s American operations could be bought outright. Another option reportedly on the table is a deal in which ByteDance would retain a minority share in the company and lease it the use of its recommendation algorithm. Such an arrangement might be preferable to ByteDance and its investors. That group includes Jeff Yass, a prominent Republican donor who is said to have influenced Mr Trump’s thinking on TikTok. (The president tried to ban the app during his first term.) Mr Yass’s investment firm, Susquehanna International Group, is represented on ByteDance’s board and reportedly holds a 15% stake in the company; it is said to be seeking a stake in TikTok’s American business should it be sold.

Will any eventual deal be good for the American people? One reason for the TikTok ban was to stop American users’ data being shared with the Chinese authorities, who hold sweeping data-gathering powers over China-based companies. If ByteDance retains part-ownership, hawks in Congress may believe that the danger remains. Previous efforts to quarantine American TikTok users’ data from ByteDance employees in China have been breached, according to whistleblowers. And if ByteDance keeps control of the recommendation algorithm, it could theoretically still influence Americans’ news diet.

Even if TikTok is sold in its entirety, the government-orchestrated process leaves Americans with an uncomfortable question. Part of the argument against the app being Chinese-owned was that American users might then be fed politically biased content by a business that was in hock to a government which considered itself above the law. TikTok users might look at the auction being run from the White House and wonder: has that outcome been avoided? 

Source: The Economist

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