TikTok will have to sell its American business and cut all ties with China

TikTok will have to sell its US business and sever all ties to China if it doesn't want to be blocked by the US. According to The Wall Street Journal, this was a warning the White House recently issued against ByteDance, the parent company of the popular video app.

The above publication indicates that the Chinese company was informed about the ultimatum through the Committee on Foreign Investment in the United States (CFIUS), which belongs to the US Department of the Treasury. Everything points to the fact that the security check that several agencies were conducting would have been canceled in order to exclude the Asian giant from interfering with the application. And that there will be no intention of taking it back.

TikTok cannot say that the US threat came as a surprise. Yesterday it became known that the social network is ready to sell its business in this country. However, it was clear that this was the last resort. This was primarily intended to convince the Joe Biden administration of the feasibility of Project Texas.

The latter consists of "fencing" the data of TikTok users in the United States, storing and managing it in the Oracle cloud structure. Larry Ellison's firm will also ensure that information from it is not shared without permission. While an independent board chosen by the US government will oversee its overall operation. The project has been under discussion for months, but increased criticism of the application will lead to its final rejection.

For now, TikTok claims there is no better alternative than Project Texas for data protection in the US. The company claims that the security level of this offer exceeds that of any other North American company that handles its users' sensitive information. The video app is estimated to have invested over $1.5 billion to build this framework.

US demands sale of TikTok

According to Bloomberg, CFIUS' next step will be to begin the process of finding and approving a buyer for the US TikTok business. The procedure, which will be much more complicated than it might seem at first glance. The point is that the hypothetical next owner of the video app would be forced to overhaul the platform's algorithm to prevent any possibility of espionage by China.

Should such an opportunity arise, the report assures that there will already be several stakeholders who will get their hands on TikTok. In any case, no specific names are mentioned. The possible purchase of the social network was one of the main concerns of 2020, when Donald Trump also wanted to veto it. By that time, corporations such as Microsoft, Oracle, and even Twitter had come onto the scene to try to shut down the business. But none of them succeeded.

From the side of ByteDance, the mood would be quite tense. The company will even consider suing the United States if it takes a "sell or block" stance. In addition, facing the process of selling TikTok will not be so easy, since China will also have to give its consent.

ByteDance is currently 60% owned by global investors. So far, 20% belongs to his employees, and the remaining 20% belongs to the founders of the company, led by Zhang Yiming and Liang Rubo. Although the voting rights of the latter are greater than those of other shareholders.

If TikTok cuts ties with its Chinese parent company, its US business is estimated to be worth between $40,000 and $50,000 million.