A group of U.S.-based investors is reportedly interested in purchasing a controlling stake in the popular short video social media platform TikTok from its Chinese parent company ByteDance. According to sources with knowledge in the matter, the group of investors is apparently in the middle of discussing the prospect, which would make TikTok an American-controlled company.
The same sources claim that the group has already held meetings with ByteDance executives. ByteDance's founder and chief executive officer, Zhang Yiming, is reportedly open to the idea and is not opposed to selling a controlling stake in the social media platform operator. The group is reportedly comprised of major U.S. investors such as Sequoia Capital and General Atlantic.
The negotiations come amid the continued debate over how the social media platform should be handled in the United States. Some lawmakers and politicians have argued that allowing the continued use of the app could pose a threat to the country's national security as data could be sent to Chinese servers. The volume of the debate had further increased as tensions between China and the United States continue to escalate.
TikTok had previously released a statement in response to the accusations, explaining that it was operating independently from ByteDance. It added that none of its data centers were located in China. In June, former Walt Disney Direct-to-Consumer & International chairman Kevin Mayer took over as TikTok's new CEO.
Last month, the House of Representatives had voted to ban the use of the app on all federally issued devices. This was followed by a reported plan by the Trump Administration to altogether ban the app from being used in the country, similar to what India had already done. India outright banned the use of the app in response to public outcry to boycott Chinese products following a deadly border clash between its troops and Chinese soldiers.
Instead of an outright ban, some lawmakers and politicians have suggested that there could be another more profitable option. White House economic adviser Larry Kudlow suggested on Thursday that TikTok could technically spin away from ByteDance and become its own independent U.S. firm. Having investors take control of the company would be an effective compromise as opposed to banning the use of the platform.
While the idea may be plausible and entirely better than a nationwide ban, the sale of TikTok will require some delicate maneuvering to prevent any further escalation in the tension between China and the United States. If TikTok is purchased by a competing platform, such as Snap, the transaction could also raise unwanted antitrust concerns.