Zarah ChoudharyChinese officials are evaluating contingency plans for TikTok’s US operations, with one option involving Elon Musk acquiring the business if the app faces a ban in the United States, according to Bloomberg sources.
Beijing reportedly prefers TikTok to remain under the ownership of its parent company, ByteDance Ltd.
However, TikTok appealed to the US Supreme Court to overturn the impending ban, which could take effect on 19th January.
Supreme Court justices indicated they are likely to uphold the law.
The deliberations by Chinese officials were preliminary, but Musk emerged as a potential buyer in discussions.
Under one scenario, Musk’s company, X (formerly Twitter), could acquire TikTok’s US operations, integrating it with his existing businesses.
TikTok’s user base of more than 170 million in the US could bolster X’s advertising initiatives and complement Musk’s artificial intelligence company, xAI.
Sources indicated that Chinese government approval would be required for any sale, as its export rules restrict the sale of software algorithms like TikTok’s recommendation engine.
ByteDance previously stated that the Chinese government’s influence was limited to its domestic operations.
However, Beijing’s control mechanisms, including a ‘golden share’ in a ByteDance affiliate, give it strategic leverage in decisions involving the company.
TikTok’s US operations could be valued between $40bn and $50bn, according to Bloomberg Intelligence analysts.
Musk, who acquired Twitter for $44bn in 2022, is still repaying loans from that transaction, raising questions about how he would finance a potential TikTok deal.
ByteDance’s leaders remain focused on contesting US legislation mandating the sale or shutdown of TikTok’s US business due to national security concerns.
The company argued that the law violates First Amendment protections for free speech.
The potential acquisition of TikTok’s US operations is complicated by its legal and logistical intricacies, including challenges in separating its US and global operations.
While Chinese officials continue to deliberate, it remains unclear whether discussions have involved Musk, ByteDance, or TikTok directly.
Bloomberg noted that Musk’s existing relationships with the Chinese government, particularly through Tesla’s Shanghai factory, may position him as a viable intermediary in this negotiation.
