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Here we go again! TikTok faces a potential shutdown in the U.S. after Saturday, April 5, if its Chinese parent company doesn’t reach an agreement to sell a controlling interest in the hugely popular video app.
Will TikTok go dark? With just days to go before the deadline set by President Trump, it’s not clear what will happen next for TikTok, which claims to have 170 million users in the U.S.
Some background: A federal bill passed last year with bipartisan congressional support and signed into law by President Biden mandated that ByteDance sell a controlling interest in TikTok to non-Chinese owners or essentially face a nationwide ban of the app. TikTok, after losing an appeal to the Supreme Court challenging the divest-or-ban law on First Amendment grounds, shut down the app in the U.S. on Jan. 18 ahead of the law’s deadline. But TikTok restored service to U.S. users about 14 hours later, citing President Trump’s pledge to not enforce the ban while he sought to broker a solution keeping the app legal.
Trump, who in his first term sought to force a sale of TikTok over national security concerns, now wants to keep it legal. “I have a warm spot in my heart for TikTok,” he said in December, citing his belief that the app helped drive younger Americans to vote for him.
On Sunday, Trump told told reporters on Air Force One, “I’d like to see TikTok remain alive.” Regarding discussions about a sale of a stake in TikTok, he said, “We have a lot of potential buyers. There’s tremendous interest in TikTok,” adding, “The decision is gonna be my decision.”
Who could end up owning a piece of TikTok? Oracle, which has an agreement to host TikTok’s U.S. user data, reportedly has been in discussions about a deal. Private-equity firm Blackstone has been mulling taking a “small stake” in the app, the New York Times reported, while others — including YouTube superstar MrBeast — have been in the mix among possible buyers.
But there are wrinkles in clinching a deal. The TikTok divest-or-ban law expressly prohibits TikTok’s operation in the U.S. if it continues to use the content-recommendation algorithm controlled by ByteDance; meanwhile, the Chinese government has expressed opposition to any TikTok sale that includes the algorithm. “We see no way that the TikTok algorithm is sold as Beijing and ByteDance would view this as a non-starter in a deal,” Wedbush Securities analyst Dan Ives wrote in a research note Tuesday.
Last week, Trump suggested he would use U.S. tariffs on Chinese imports as a bargaining chip in trying to win approval for a TikTok deal. “Maybe I’ll give [China] a little reduction in tariffs or something to get it done,” he told reporters. One percentage point in tariffs with China “would probably be worth more than all of TikTok, as valuable as TikTok is,” the president added.
Some observers believe if April 5 comes and goes without a TikTok deal nailed down, Trump would simply declare another extension. On Jan. 20, Trump issued an executive order deferring enforcement of the divest-or-ban law by 75 days — a move that the law’s supporters said had no legal basis. As directed by Trump, U.S. Attorney General Pam Bondi reportedly sent both Apple and Google letters that they wouldn’t be liable for hosting TikTok during the 75-day period, prompting both tech companies to restore TikTok to their U.S. app stores.
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If there’s no deal by April 5, Trump would likely issue another order delaying the TikTok ban by “30 days or longer” to “fully iron out the complex deal structure,” according to Ives. The analyst said a point of deal negotiation would be ByteDance retaining minority ownership in TikTok “but potentially higher than the 20% threshold currently required by U.S. law.” Ives expects ByteDance will continue to control TikTok’s content algorithm. “We believe TikTok’s valuation is roughly $100 billion, but without the golden jewel algorithm the deal price/valuation is closer to $30 billion to $40 billion in our view,” he wrote.
ByteDance has said 60% of its ownership is represented by “global institutional investors” including Blackrock, General Atlantic and Susquehanna International Group, with 20% owned by its Chinese founders and 20% by employees (including U.S. employees). According to the U.S.’s divest-or-ban law that targets TikTok, ByteDance is prohibited from directly or indirectly owning more than 20% of TikTok.
Amid the uncertainty about TikTok’s future in the U.S., the company has seen some senior execs exit. Those include Ole Obermann, global head of music business development, and Blake Chandlee, who oversaw ad sales and marketing as head of global business solutions. Meanwhile, TikTok last week hired Nathaniel Brown, formerly Warner Bros. Discovery’s head of corporate communications, as global corporate communications chief.
It’s worth noting that ByteDance did, at one point, consider selling a large position in TikTok to U.S.-based companies. Back in 2020, after Trump ordered ByteDance to sell TikTok to U.S. entities, ByteDance reached a tentative deal with Oracle and Walmart, which under the proposed terms would have acquired a combined 20% stake in TikTok. But that was scrapped after Biden assumed office in 2021 and the new administration repealed Trump’s executive order pending further review.
