TikTok sale: Popular video app's US future comes down to the wire

TikTok should already be shut down in the United States, according to the law.

Last year, the Biden administration demanded that the Chinese video app's US operations either be sold or face a nationwide ban over national security issues.

Lawmakers were concerned how the company deals with US-based user data and possible Chinese government manipulation.

The idea of forcing ByteDance, its Chinese owner, to sell to an approved non-Chinese owner received a lot of bipartisan Congressional support and was signed into law by Joe Biden last April.

The federal law targets "foreign adversary controlled applications" and specifically mentions TikTok and ByteDance. This definition means that no more than 20% of the company can be owned by individuals or companies in a country listed as a "foreign adversary" — a title the US has bestowed on China.

The law gave the company until January 19, 2025, to sell its US-based business and was upheld by the Supreme Court. The deadline was one day before Donald Trump's second inauguration. 

The TikTok countdown deadline

As the January deadline approached, the app was briefly shut down, but returned after Trump signed an executive order to give it more time for sale negotiations. It didn't return to app stores until February.

The new sale deadline is April 5.

So far, the company has still not changed hands. Chinese officials are publicly against a sale and have made it clear that the company's proprietary algorithm is technology that cannot leave China.

Trump has recently nonetheless teased a sale. In March, the president told reporters that the US was negotiating with interested buyers.

"We're dealing with four different groups. And a lot of people want it, and it's up to me," he said, without saying who they were or giving any details. 

More recently, he said a deal would be announced before the latest deadline. This is a huge reversal for Trump who was willing to close TikTok back in 2020, but was blocked by federal courts.

Who actually owns TikTok now?

TikTok is a subsidiary of privately held ByteDance. According to numbers published by TikTok, roughly 60% of ByteDance is owned by global institutional investors. Another 20% is owned by the company's founder and 20% by ByteDance employees.

In a 2020 legal filing the US Department of Justice called TikTok founder Zhang Yiming a 'mouthpiece' of the Chinese Communist PartyImage: Chinatopix/AP/picture alliance

Though these numbers cannot be verified since the company is not obliged to release official reports, it seems much of the company is already owned outside of China.

Pennsylvania-based trading and technology firm Susquehanna International Group is the biggest outside investor and now has 15% of the company. Arthur Dantchik, a Susquehanna co-founder is on the five-member ByteDance board.

Other current outside investors are Sequoia Capital and General Atlantic, both headquartered in the US. William E. Ford, the CEO of General Atlantic, is also on the ByteDance board.  

Who is in line to buy TikTok?

Rumors have been flying of possible suitors to take over TikTok's US business.

The name Steven Mnuchin, a former Trump treasury secretary, keeps coming up. As treasury secretary he was a cheerleader for a TikTok sale in 2020. Some have suggested the US government may take over part of the company.

Other potential investors are Microsoft, artificial intelligence startup Perplexity AI and groups headed by billionaire businessmen Frank McCourt or Andreesen Horowitz.

Private equity firm Blackstone Group has also been mentioned. Its CEO, Stephen Schwarzman, is a well-connected Trump supporter and Republican megadonor.

Perhaps the most likely candidate to steer a takeover is Oracle. The company is already involved with TikTok and showed interest in the company during Trump's first term.

Since 2020, Oracle has been keeping US user data on domestic servers. Since the start of this year, the company's role grew to include more data security measures to ensure compliance with US regulations.

What does Trump want from China?

It is hard to put a price tag on TikTok since there are so many factors and unknowns right now, especially if the app's algorithm is not part of the sale.

But any of the current investors could increase their stakes or work with others to combine their influence by adding in fresh capital. In the end though, it will be a question of price, US government pressure and Chinese acceptance of the deal.

The president has said tariff negotiations could be part of the deal. Trump has already hit Chinese imports with 20% tariffs on top of existing duties. If China let a sale go ahead he may reduce tariffs or hold back on implementing higher ones.

If a sale doesn't materialize soon, Trump has promised to extend the deadline again. Otherwise the ban could go into effect and TikTok could go dark for millions of US users.

Edited by: Uwe Hessler