As pressure mounts on TikTok, could Chinese parent ByteDance cash in on the company in the US?

TikTok is under growing Anglo-American political pressure – and from the White House in particular – amidst ongoing national security concerns over its Beijing-based parent company.

In an interview on July 6, US Secretary of State Mike Pompeo said that the United States was “looking at” the banning of Chinese social media apps, including TikTok.

That same week, US financial giant Wells Fargo, which employed 263,000 people as of April – told its employees to delete the app off company phones.

Last Wednesday (July 15) the Chief of Staff for US President Donald Trump, Mark Meadows, told journalists that “action” by the US Government against TikTok could be taken within “weeks, not months”.

And on Friday (July 17), as first noted by New York Times journalist Taylor Lorenz, Donald Trump’s re-election campaign has started running ads on Facebook and Instagram suggesting that TikTok is “spying” on its users.

Meanwhile, over in the UK, conservative politician Sir Iain Duncan Smith has called TikTok “as much threat as Huawei”, the Chinese company whose 5G equipment will be banned in the country by 2027, reportedly due to pressure from the American government.

ByteDance has also reportedly scrapped plans to build a new TikTok mega-HQ in London due to the UK’s growing tensions with China.


Amidst all of this transatlantic backlash, on Wednesday (July 16), Reuters reported that White House economic adviser Larry Kudlow told journalists that TikTok is “expected” to split from ByteDance and operate as a US firm.

The move, he said, would be ‘a better option than a ban on the app’, reports Reuters.

Reuters’ report adds that Kudlow declined to comment in response to being asked whether or not TikTok could be acquired by a US company.

“We haven’t made final decisions,” said Kudlow regarding a potential ban, “but..I think TikTok is going to pull out of the holding company which is China-run and operate as an independent American company.”

This isn’t the first time that a potential ByteDance-TikTok split has been reported.

Reuters also reported in November 2019 that ByteDance was mulling separating TikTok from its Chinese operations ‘amid a US national security panel’s inquiry into the safety of the personal data it handles’.

Meanwhile, in December, an article published by Bloomberg suggested that ByteDance was considering the sale of a stake in TikTok.

Citing unnamed sources, Bloomberg reported at the time that ByteDance ‘advisors are pitching everything from an aggressive legal defense and operational separation for TikTok to sale of a majority stake’, but this suggestion was ultimately shot down by TikTok boss Alex Zhu.


ByteDance’s potential spinning off of TikTok in the US brings another Chinese tech giant-owned music company subsidiary to mind – one that has obviously not faced TikTok’s level of scrutiny over its Chinese ties: Tencent Music Entertainment (TME).

Majority-owned (58.1%) by Chinese media/entertainment giant Tencent, TME is home to three of China’s leading music streaming services; QQ Music, Kugou and Kuwo.

You might remember that TME started trading on the New York Stock Exchange on December 12, with a post-IPO market valuation of over $21bn.

Could ByteDance follow a similar strategy, spinning off a portion of its business on a US stock exchange?

Or could a US company just buy that portion – whether minority or majority – outright?

Maybe a bigger question would be: which US companies could even afford such a deal?

According to a Bloomberg report in May, ByteDance’s own valuation on private markets had spiralled above $100bn.

Today (July 20), TikTok once again denied accusations that it is passing user information to – or controlled in any way by –  the Chinese government.

Theo Bertram, TikTok’s head of Public Policy for Europe, the Middle East and Africa, told the BBC:  “The suggestion that we are in any way under the thumb of the Chinese government is completely and utterly false.”Music Business Worldwide

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