Chinese Authorities Will Block TikTok Sale, Even If It Forces Its Exit from the US

The Chinese authorities are set to prevent the compulsory sale of TikTok, thereby limiting the owner of the platform, ByteDance’s options. The Chinese government, while criticizing the United States for attempting to ban TikTok, has indicated that it would prefer an application ban in the US to a sale. This puts ByteDance in a hard spot as the short video platform could lose its biggest market of 170 million users.

On Wednesday, the US House of Representatives overwhelmingly supported a bill requiring ByteDance to sell TikTok, threatening to block the platform in the US on grounds of national security. TikTok has been accused of collecting data from its US users and possibly transferring it to the Chinese government. The bill still needs to be approved by the US Senate. However, achieving this might prove difficult, considering ByteDance increased its lobbying expenditure by 77% last year, spending up to $8.74 million, with the majority of the money directed towards the Senate, according to OpenSecrets, a platform that tracks political expenses.

The Chinese government had earlier emphasized that the sale of TikTok, which would involve a technology transfer, requires approval from the authorities. Last Thursday, a representative from China’s Ministry of Commerce urged the US to “stop putting unjustified pressure” on TikTok, adding that ByteDance must “strictly comply with Chinese laws”.

“Policymakers in Beijing see the bill as an attempt to ‘squeeze out’ a valuable asset and will not tolerate such treatment,” commented Tom Nunlist, a Technology Policy Analyst at Shanghai consulting firm Trivium China. If the US legislators succeed in blocking TikTok, similar penalties could befall other Chinese companies.

“The Chinese leadership would likely prefer national pride over ByteDance’s financial interests,” wrote Gabriel Wildau, Managing Director of consulting firm Teneo, in a client letter.

The bill to block or sell TikTok has not yet passed, but former Activision Blizzard chief, Bobby Kotick, and former US Treasury Secretary, Steven Mnuchin, have already shown interest in purchasing the company. The deal’s estimated value exceeds $100 billion, despite TikTok’s revenue for the past year totaling only $20 billion and the company yet to become profitable. ByteDance founder, Zhang Yiming, has not announced any TikTok purchase negotiations.

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