Sara Fischer: China signals willingness to allow TikTok sale

This piece is by Maria Curi and WWSG reclusive thought leader Sara Fischer.

The Chinese Foreign Ministry on Monday said that private companies can make their own decisions about whether to sell or merge, reversing its previous statement that it opposes any effort by ByteDance to sell TikTok U.S. to a foreign owner.

Why it matters: While a few interested buyers have emerged, China’s unwillingness to let ByteDance sell TikTok’s U.S. arm has tied the company’s hands in the face of a U.S. law that required such a sale to avoid a ban.

State of play: The South China Morning Post and Wall Street Journal reported the Chinese official’s remarks to reporters on Monday.

• “For such actions as corporate operations and acquisitions, we always believe that they should be decided independently by companies based on market principles,” Chinese foreign ministry spokeswoman Mao Ning told reporters in Beijing on Monday, per SCMP.
• “If Chinese companies are involved, they should comply with Chinese laws and regulations,” she added.

Catch up quick: The Supreme Court upheld the ban Friday, saying TikTok’s argument that the law violated its First Amendment rights was invalid, given that the law doesn’t call for a ban, but rather a divestiture to a U.S. company.

• Lawmakers have been split on whether they should try to find a way to extend the ban’s deadline or keep TikTok shut out of the U.S. unless it found a U.S. buyer.
• Donald Trump on Sunday indicated he will “most likely” grant a 90-day TikTok extension to prevent the app from going dark while work on a deal to sell the app proceeds.
• He wrote on his platform Truth Social that his “initial thought” is for the U.S. to have a “50% joint ownership” in a venture with “current owners” and or “new owners.”

Yes, but: The current owner — ByteDance — cannot be involved, under the U.S. law’s provisions.

• For Trump to satisfy a qualified divestiture under the law, he would have to consult with government agencies and determine it’s impossible for China to still control TikTok’s algorithm or data sharing.
• The law explicitly bars Trump from allowing a Chinese entity to continue being involved with TikTok, even through an agreement with a U.S. company.
• The law also states that Trump would need to certify to Congress not only that there’s been “significant progress” toward executing a qualified divestiture, but there are “binding legal agreements” in place to enable the sale during the extension period.

Of note: While it’s hard to value TikTok’s U.S. arm separately from its parent company, third parties have estimated it to be valued at anywhere between $20 billion and $100 billion.

• Billionaire Frank McCourt, who is leading a bid to buy TikTok, has $20 billion of capital reportedly committed to his bid, but it’s unclear exactly who all of those potential investors are. McCourt said his deal would comply with the Supreme Court’s ruling on Friday.

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