Millennium Post

A tough balancing act

In a bid to avoid being left out in the cold as a result of international power games, ByteDance is now planning a new US TikTok IPO, a new company that will be called TikTok Global. With the deadline for any kind of deal fast approaching, ByteDance will have to play quite a juggling act with it having to offer adequate appeasement to the US while at the same time making sure to not antagonise the Chinese Government. After rejecting Microsoft's bid, there were rumours that Oracle had gone on to clinch the deal. Now, many aspects of this supposed deal are unclear. First, there is the nature of the sale itself. Just how much of this business is ByteDance offering? Trump has been adamant on the fact that ByteDance must not maintain majority control over whatever form TikTok will take in the US given the perceived security risks. China, while initially silent regarding the matter, may have something to say about the whole matter now as it approaches its deadline. Reuters recently quoted certain sources that claim that Beijing would rather see the TikTok US operations close down than a forced sale be made. Apparently, such a sale would not only make ByteDance but also China look weak in the face of US pressure, an unacceptable compromise. If true, this certainly creates a rather obvious problem as even the most generous of interpretations for this situation would not be able to describe the sale as anything but forced by the White House.

Indeed, China looks ready to make this a longer and more protracted issue with a new set of regulations that were introduced in August that would now require the express approval of Beijing before any technology exports. The current phase of the deal, while still fluid, does appear to be meeting the US demands at the moment. Sources close to the deal have stated that TikTok Global would have a majority of American directors with a US chief executive and security expert on the board. Furthermore, it is expected that Oracle Corp and even Walmart Inc could hold at least a 60 per cent stake in the new company. As Trump is yet to sign off on it, it is hard to say what form the deal would ultimately take. ByteDance is trying its best to appeal to Trump's business sensibilities with an offer to create 25,000 new US jobs with the opening of a TikTok US headquarters.

As anyone could expect, it is unlikely that the deal will end up going forward quite so simply. This is not the first Chinese app divestment that US lawmakers have called for and it won't be the last. Already Trump seems to be intent on targeting WeChat next. While the US may have succeeded in targeting Chinese ownership of Grindr in 2016, China no longer looks to be in a compliant mood. If indeed the sale is viewed as an allegory for a larger game of nations, then China would scarcely give consent to a deal that looks to be made to pander to the Trump administration. Indeed, this clash of national egos may make any logical conclusion to this deal rather unlikely. Business and politics may complement each other but they do not do well when mixed in such a manner after all. In all this, ByteDance will be forced to play a game of balancing that many other companies will likely find themselves in the near future. Concerns over data use and storage are only growing and it is expected that many app makers may eventually face such challenges as lawmakers in the 21st century begin to make sense of governing the digital realm.

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