Chinese officials are considering a possible option involving the sale of TikTok’s U.S. operations to Elon Musk if the company fails to avoid a potential ban, Bloomberg News reported Monday, citing people familiar with the matter.
Those officials strongly prefer that TikTok remain owned by parent company ByteDance, according to sources, and the Chinese firm is challenging a law passed last year before the U.S. Supreme Court.
But the judges noted during arguments on Jan. 10 that they are likely to uphold the law that forces the parent company to sell its U.S. business or else the social network will be banned starting Jan. 19.
According to Bloomberg News, senior Chinese officials had already begun discussing contingency plans for TikTok as part of a broad discussion about working with Donald Trump’s administration, one of which involves Musk, said the sources, who asked not to be identified. identified as they reveal confidential discussions.
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A potential high-profile deal with one of Trump’s closest allies has some appeal for the Chinese government.
Under a scenario that has been discussed by the Chinese government, Musk’s social network X would take control of TikTok US and run the companies together.
With more than 170 million users in the United States, TikTok could bolster the X network’s efforts to attract advertisers.
Musk also founded a separate artificial intelligence company, xAI, which could benefit from the huge amounts of data generated by TikTok.
Chinese officials have not yet reached a firm consensus on how to proceed and their deliberations are still preliminary, Bloomberg News sources said.
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It’s unclear how much Chinese parent ByteDance knows about the Chinese government’s discussions, or whether TikTok and Musk have been involved.
It is also unclear whether Musk, TikTok and ByteDance have held talks about the terms of a potential deal.
Musk posted in April that he believes TikTok should remain available in the United States.
The talks in Beijing suggest that TikTok’s fate may no longer be in the sole hands of ByteDance, the sources said.
Chinese officials acknowledge they will face tough negotiations with the Trump administration over tariffs, export controls and other issues, and view the TikTok negotiations as a potential area of reconciliation, according to sources.
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The Chinese government holds a so-called gold stake in a subsidiary of ByteDance, giving it influence over the company’s strategy and operations.
TikTok maintains that the control only applies to the Chinese subsidiary Douyin Information Service, and has no influence on ByteDance’s operations outside China.
Still, Beijing’s export rules prevent Chinese companies from selling their software algorithms, such as the one that is an integral part of TikTok.
Since the Chinese government would have to approve a sale that included TikTok’s valuable recommendation engine, it has an important say in any potential deal.
TikTok’s operations in the United States could be valued between $40 billion and $50 billion, Bloomberg analysts estimated last year.
This is a substantial sum even for the richest person in the world. It is unclear how Musk could carry out such an operation, whether it would require the sale of other stakes or whether the US government would approve it.
Musk committed $44 billion to Twitter in 2022 and is still paying off significant loans.
Bloomberg noted that Musk and his representatives did not respond to a request for comment, nor did representatives for ByteDance and TikTok.
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