TikTok deal may not be lucrative enough for any potential US buyer, says GlobalData

Following the news that China-based multinational Internet technology company ByteDance dropped the sale of video-sharing app TikTok’s US operations to Microsoft and selected Oracle as technology partner to avoid a possible US ban;

Aurojyoti Bose, Lead Analyst at GlobalData, a leading data and analytics company, offers his view:

“ByteDance, which is valued at about US$100bn in private markets, is having a tough time with forced sale of TikTok’s operations looming over in the US. With Microsoft out of the race, the likelihood of Oracle acquiring TikTok’s US operations looks bright. However, the Chinese Commerce Ministry recently amended its export control rules to restrict the sale of several technologies to foreign players, which is likely to complicate and delay the TikTok sale further. The amended rule calls for government approvals for export of certain technologies.

“It is believed that ByteDance is trying other options as well to address the US data security concerns and avert the ban while also obeying the new export rules. One option could be entering into partnership with any American firm, which will also be responsible for managing TikTok’s US user data.

“Several media reports are doing the rounds that Oracle would be the technology partner for ByteDance and will also be responsible for managing TikTok’s US user data. However, China is likely to prefer the sale of TikTok without its core algorithm, which may make the deal not lucrative enough for any potential US buyer.  It will be interesting to see if Oracle or any other potential buyer pursues to acquire the US operations of TikTok (valued at US$30-50bn). A lot will also depend on whether any such deal gets a nod from both the US as well as China and we can except to see a lot more twists and turns before it gets finalized.”

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