The controversy over TikTok in the business world isn’t so much about its users and their antics as it is the sudden dictates from the federal government in the United States that the social media platform’s parent company, Byte Dance, needs to pursue a sale of the US division of its uber-successful app.
That’s never really happened before but, even so, the deal has attracted some huge names in tech, among them including Microsoft and others.
It remains to be seen what kind of impact the political turmoil around the deal will have on the outcome of everything but one thing is certain: The demand around for TikTok as an asset has grown if anything thanks to this added fuel to the flame.
TikTok Gets Caught Up in Trump’s Trade War with China
While it is arguable whether or not Byte Dance would ever have considered selling its US arm of TikTok, one thing is sure and that is that the social media platform was and still is a hot property, accusations of data theft notwithstanding.
Kicked off by the Trump administration’s displeasure with TikTok’s access to US users’ data, the battle over TikTok has become yet another proxy in the administration’s ongoing trade struggles with China.
The politicization of the issue has now brought it to the fore back in the PRC where the government there is now trying to actively curtail the Trump administration’s efforts to dislodge Byte Dance’s US version of TikTok.
China’s Tech Export Laws Could Prevent Sale
Of course, President of the PRC Xi Jinping is responding somewhat in kind to Trump’s attacks but is doing his best to be seen as reacting rather than escalating the trade debacle between the two countries.
One way the PRC is possibly going to block the sale of TikTok in any form is a ban on the export of technology from China to other parts of the world. This is more likely than not and could make all of the talk about a potential sale of TikTok to anyone meaningless.
But it could also end up meriting a response from the Trump administration that may or may not be equivocal in nature. In fact, as some analysts worry, it could set off a domino effect wherein the two economies start shutting one another’s tech sector completely off from one another.
Oracle Reaches for TikTok in Possible Bid for New Markets
Even though the waters around this whole situation are quite murky, to say the least, this has not scared off names like Oracle from throwing their hat into the ring. A true dark horse bid, the Larry Ellison company is competing with Microsoft to secure a social media platform but most people can’t see what Oracle would do with such an addition to its portfolio. TikTok (or any successful social media platform) makes sense for Microsoft given its extensive entertainment division and portfolio of products like the Xbox.
Geopolitical futurist at a strategy consulting firm called Center for Innovating Abishur Prakash told CNBC some of his theories about why Oracle is making these moves: “By putting TikTok’s data on Oracle servers, Oracle may be able to build in-roads into new industries. …In the post-Covid world, every business is trying to reinvent themselves. And, within geopolitics of tech, there isn’t just risks, but also opportunities. Oracle may have its own ideas as to how it could use TikTok that it hasn’t revealed to the market yet.”
As far as Microsoft is concerned, there are various reasons for the company’s interest in TikTok. But The Verge thinks that gaming figures prominently among them, writing, “Microsoft could take advantage of that direct access to TikTok users with ads for Surface, Xbox, and other products, or even as another base for its game-streaming ambitions. Google is planning to leverage YouTube to integrate its Stadia streaming service, and TikTok would give Microsoft a response with xCloud game streaming.”
For Oracle, none of this really makes a lot of sense. But it only gets weirder from here.
Walmart Joins the Fray
Perhaps even stranger than Oracle’s bid is the one coming from retail giant Walmart. Yet, in terms of what Walmart could potentially get out of a TikTok acquisition, the picture is much clearer to the public than whatever Oracle is seeing in private. Namely, TikTok is one of many apps in China that help connect users to online retailers for purchases. Walmart wants to bring that tech to US shores in order to capture consumers in much the same way.
In China, many apps can handle everything from payment to posting your latest missive and Walmart, among others, wants to be one of the first to make that a big thing in the United States. One major player that is continually having a go at it with somewhat limited success (especially given their reach) is Facebook. Yet Facebook is not a retailer and Walmart is. The thinking along these lines highlights Walmarts inherent strengths in retail and payments processing which is and will likely always be a tangential part of Facebook’s business.
DA Davidson senior research analyst Michael Baker said in an investor note quoted by CNN, “To the extent that TikTok would add more eyeballs for Walmart’s e-commerce platforms, that would make Walmart more attractive for third party sellers for both the Marketplace and as an advertising platform.”
Trump Administration Demands a Cut for the Treasury
Amid all of this discussion about TikTok, its value to various companies, and its valuation, not to mention how any of this would be achieved, the Trump administration is now saying that the US Treasury should get a cut of the deal since the value has “ballooned” since Trump’s intervention.
While this is unlikely to happen, it does add yet another twist in the story of the ongoing trade wars and privacy concerns that have now snagged up one of China’s biggest social media platforms. There is evidence, however, that the Trump administration’s involvement, rather than helping a US company acquire TikTok, is actually making it more difficult.
“When the deal talks began, Microsoft is said to have been reluctant to do any kind of large TikTok acquisition, due in part to the rising tensions between the U.S. and China, according to the Times report. However, a minority stake in the wildly popular video sharing app was viewed positively as it may lead to TikTok ditching Google Cloud, which it currently uses, and signing up to Microsoft Azure, instantly making it one of Microsoft’s largest cloud customers. TikTok could also be integrated with Microsoft’s $7 billion advertising business,” CNBC writes.
Whether a minority stake in the company would satisfy the current controversy about user data is another question entirely but it doesn’t look like it would have any impact on lessening the trade tensions between the US and China that have helped give rise to this situation.
