TikTok Deal Talks Center on US Investor Buyout

The White House-led negotiations over the future of TikTok are reportedly converging on a plan for existing US investors to increase their stakes in the company and acquire its US operations. This development, as reported by Reuters, aims to prevent a potential ban on the popular video-sharing app.

Reuter's sources, who requested anonymity due to their lack of authorization to speak on record, revealed that the proposed deal involves creating a separate US entity for TikTok. This entity would have reduced Chinese ownership, ensuring compliance with US law requiring less than 20% Chinese ownership.

Susquehanna International Group, led by Jeff Yass, and General Atlantic, led by Bill Ford, are spearheading discussions with the White House on this plan. Private equity firm KKR is also reportedly participating in the talks.

The fate of TikTok, used by nearly half of all Americans, has been uncertain since a law took effect in January, requiring ByteDance, TikTok's parent company, to either sell its US operations or face a ban on national security grounds. This law, passed with bipartisan support, reflects concerns in Washington that TikTok's ownership structure makes it susceptible to influence from the Chinese government.

TikTok has consistently maintained that US officials have misrepresented its ties to China, arguing that its content recommendation engine and user data are securely stored in the US on Oracle's cloud servers. The company also insists that content moderation decisions affecting US users are made solely within the US.

Under the proposed deal, Oracle would continue to host US user data, providing assurances that this data is inaccessible from China. This plan, however, would require significant restructuring within ByteDance, potentially involving a substantial dilution of Chinese ownership in the new US entity.

The White House's unprecedented involvement in these talks, effectively acting as an intermediary, reflects the high stakes involved and the political sensitivity surrounding TikTok's future in the US. President Biden, who inherited the executive order issued by his predecessor Donald Trump, has pledged to "save TikTok" and prevent a ban, citing the app's popularity and potential influence on the upcoming presidential election.

Trump, initially supportive of a TikTok ban during his first term, has shifted his stance in recent months, actively working to broker a deal that would keep the app operational in the US.

Aside from the investor group led by Yass and Ford, other potential acquirers include a group led by billionaire Frank McCourt and another involving YouTube star Jimmy Donaldson, known as Mr. Beast.