ByteDance investors lead race in TikTok acquisition discussions

The U.S. government is actively engaged in negotiations regarding the future of TikTok, the popular short-video app owned by Chinese parent company ByteDance. The discussions, led by the White House, are shaping up around a plan for major non-Chinese investors in ByteDance to increase their stakes and take control of TikTok’s U.S. operations.

Proposed Plan to Avoid a U.S. Ban

Sources familiar with the discussions suggest that the plan includes spinning off TikTok’s U.S. operations into a separate entity. The goal is to reduce Chinese ownership in this new business to below 20%, which aligns with U.S. legal requirements. This move would potentially save the app from being banned on national security grounds.

Key Players in the Acquisition Talks

Two major investors in ByteDance, Jeff Yass’ Susquehanna International Group and Bill Ford’s General Atlantic, are reportedly leading discussions with the White House. Private equity firm KKR is also said to be involved in the negotiations. While ByteDance, TikTok, Oracle, and the White House have not commented on the matter, the involvement of these investment firms suggests a serious effort to comply with U.S. regulations.

National Security Concerns and Legal Hurdles

The U.S. government has raised concerns that ByteDance's Chinese ownership could allow the Chinese government to use TikTok for influence operations. In response, lawmakers passed a law requiring ByteDance to either sell TikTok or face a ban. However, free speech advocates argue that restricting access to a foreign media platform violates the First Amendment.

Oracle’s Role in Data Security

To address national security concerns, Oracle, which already provides infrastructure for TikTok’s U.S. operations, would continue storing user data and ensuring it remains inaccessible from China. This arrangement is part of the proposed deal being discussed by existing ByteDance investors.

White House’s Unprecedented Involvement

The Biden administration is playing a pivotal role in overseeing these deal negotiations, effectively acting as an investment bank. Former President Donald Trump initially supported banning TikTok during his first term but has since shifted his stance, advocating for the app’s survival in the U.S. He recently delayed the enforcement of the ban until April 5, with the possibility of extending the deadline further.

Potential Buyers and Competing Investor Groups

Aside from ByteDance’s existing investors, other groups are reportedly interested in acquiring TikTok’s U.S. operations. Billionaire Frank McCourt and YouTube star Mr. Beast (Jimmy Donaldson) are among those exploring potential deals. Additionally, the Financial Times reported that investment firm Coatue is also involved in acquisition talks.

ByteDance’s Global Ownership Structure

According to legal filings, ByteDance is currently owned by a mix of investors and employees worldwide. About 58% of the company is controlled by global investors, while its Singapore-based Chinese founder, Zhang Yiming, holds 21%. The remaining 21% is distributed among employees of various nationalities, including approximately 7,000 Americans.

Trump Administration’s Previous Plans for TikTok

During Trump’s first term, there were discussions about involving Oracle and existing ByteDance investors in a deal that would restructure TikTok’s U.S. operations. The latest proposal echoes this plan, with ByteDance retaining a minority stake while Oracle oversees data security and software updates.

What’s Next for TikTok in the U.S.?

As the April 5 deadline approaches, negotiations continue between ByteDance investors, the White House, and other stakeholders. The outcome of these talks will determine whether TikTok can remain operational in the U.S. under new ownership or face a nationwide ban.