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ByteDance accepted a divestment to save TikTok in the US


ByteDance has agreed to divest from TikTok completely under the threat of President Trump and Microsoft taking over.  

On July 31, President Donald Trump said he would ban TikTok in the US as early as August 1. US officials consider TikTok a national security risk because it is owned by ByteDance, a Chinese company. ByteDance's decision to abandon TikTok will indicate Trump's threat to ban TikTok is a genuine negotiating tactic or intent to ban.

Previously, ByteDance still wanted to maintain a small stake in TikTok  but the White House refused. Under the proposed new deal, ByteDance will fully divest and Microsoft will take over TikTok in the US. Microsoft will be responsible for protecting all US TikTok user data.

Some TikTok investors may have the opportunity to take a small stake in the company. About 70% of ByteDance's outside investors come from the US.

As US-China relations deteriorated due to trade, Hong Kong, cybersecurity and Covid-19, TikTok emerged as a highlight in the dispute between the world's two largest economies. ByteDance considered many options for TikTok under US pressure. The company has received offers from investors like Sequoia and General Atlantic to transfer most of their owners to them. Investors value TikTok about $ 50 billion, but some ByteDance officials believe that TikTok is worth more than that.

ByteDance acquired Musical.ly in 2017 for $ 1 billion and reissued it under the name TikTok in 2018. ByteDance did not apply for a commercial license at the Foreign Investment Commission (CFIUS). Reuters said CFIUS opened its TikTok investigation in 2019.

The United States is increasingly monitoring the way developers of personal data are handled by app developers, especially if it involves military or intelligence personnel. The order to divest from TikTok was not the first time the US had acted like that.

Earlier this year, Chinese gaming company Beijing Kunlun Tech had to sell its gay dating app Grindr, which it bought in 2016 for $ 620 million, after receiving a CFIUS request. In 2018, CFIUS forced Ant Financial to cancel its purchase of MoneyGram International because of data security concerns.

ByteDance is valued at around US $ 140 billion by the beginning of 2020. Most of its revenue comes from advertising on applications operating in China, including Douyin - the domestic version of TikTok - and news aggregator app. Jinri Toutiao news as well as Xigua video streaming application and funny video application Pipixia.

 

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