President Donald Trump has said he has ‘a group of very wealthy people’ willing to buy TikTok. The social media app, which is used by nearly a third of Americans, has had a checkered history in the country, even after a bill attempting to ban it passed Congress with bipartisan support. Here we’ll look at the time of TikTok’s troubles in the US and discuss whether the company will be finally sold this time around.
Bipartisan Support to Ban TikTok
Many politicians across the political divide see TikTok as a national security risk, but the company vehemently denies this. To be sure, there are genuine concerns over TikTok being a security threat as, according to Chinese law, ByteDance could be forced to assist in national intelligence efforts, likely including sending US user data to the government. While ByteDance has denied it would ever do so, the assertion has failed to cut ice with many governments globally, with some banning it outright, while others prohibiting government employees from using the app.
Meanwhile, in April 2024, then President Joe Biden signed the Protecting Americans from Foreign Adversary Controlled Applications Act (PAFACA), which called for a ban on TikTok unless ByteDance sold its stake. ByteDance appealed that decision on First Amendment Grounds, but the federal appeals court upheld the law, which meant that TikTok was banned a day before Trump’s inauguration. The ban only lasted a few hours, however.
Restoring TikTok was among the executive orders that Trump signed on his first day in office and has since extended the reprieve through two more executive orders. The most recent order was signed in mid-June and gave TikTok a 90-day extension. Critics argue that Trump simply doesn’t have the power to push back the ban as the bill only allows for a pause if a buyer has been found.
Trump’s Views On TikTok Have Changed
Trump’s relations with ByteDance have been quite nuanced to say the least, and in his first tenure, he issued an executive order in August 2020 that gave TikTok 90 days to either sell its US assets to a US-based company or shut its operations in the country. However, he has subsequently joined the platform, even after he started his own social media platform, Truth Social.
Trump used TikTok to connect with voters during his campaign last year while toning down his rhetoric against the ByteDance-owned company.
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Trump effectively ruled out a ban while terming the app as problematic as Facebook, with which he seems to have a personal grudge. The social media giant not only banned him following the Capitol Hill violence but also worked with government officials to restrict discussion about the infamous Hunter Biden laptop story, which Trump argues amounted to election interference.
Trump Backer Holds a Significant Stake in ByteDance
A TikTok sale was said to be discussed in April, but those talks did not make headway following the escalation in US-China tensions after the two countries imposed massive tariffs on each other. Meanwhile, some see Trump’s frequent flip-flops over TikTok as related to Jeff Yass, an American billionaire options trader.
Yass was one of the largest individual donors in the 2024 elections, supporting Repbulican candidates (especially Trump) and issues. Yass is seen as quite close to the President. His trading firm, Susquehanna International Group, holds a 15% stake in ByteDance, and he personally holds another 7% stake valued in billions of dollars. Susquehanna also held a 2% stake in Digital World Acquisition Corporation, which merged with the President’s Trump Media and Technology Group (which owns Truth Social) to take the company public.
Yass helped the Club for Growth, a Republican organization lobbying against a TikTok ban, even if ByteDance does not let go of its control over the company.
A US Ban Will Hit ByteDance’s Valuation
A US TikTok ban would very likely dampen ByteDance’s valuations significantly, and some believe Trump has been delaying a TikTok ban to protect the interests of Yass. As Dan Ives, senior equity research analyst at Wedbush Securities, told CNBC last year, “It would be a gut punch to the valuation and future of TikTok if a ban and forced sale came to fruition.”
Ives, who believes that such action could hit ByteDance’s valuation by a quarter, added, “This would be a nightmare for Yass, given the major investment in TikTok.”
To be sure, allegations of quid pro quo are not new for Trump in his second tenure. For instance, on April 13, shortly after meeting the CEO of Nvidia, Jensen Huang, in a $1 million dinner at Mar-a-Lago, Trump exempted tech goods like smartphones and chips from the reciprocal tariffs.
Elon Musk (and his companies) benefited greatly from the billionaire’s association with Trump until their bonhomie lasted. Trump is now calling for a review of the subsidies that Musk’s companies are getting after an extremely public and dramatic fight between them.
Who Would Eventually Buy TikTok?
Oracle, which is already TikTok’s technology partner in the US, is said to be in the fray to buy the company’s US operations. While some reports suggest that General Atlantic and Susquehanna International Group could join Oracle in its bid, Bloomberg reported that Blackstone and VC firm Andreessen Horowitz (a16z) could be the potential partners.
Notably, Oracle was mooted as a potential buyer in 2020, as Trump pushed ByteDance for a stake sale. Oracle’s co-founder and CTO, Larry Ellison, is close to Trump and has backed him financially.
Perplexity AI and AppLovin are also seen as contenders to buy ByteDance’s stake. The former floated the idea in March, saying it would “rebuild the TikTok algorithm.”
“The People’s Bid for TikTok,” which is led by Project Liberty founder Frank McCourt and “Shark Tank” star Kevin O’Leary, and is backed by Reddit co-founder Alexis Ohanian, is also considering buying TikTok’s US operations. However, it may not have the funds to do so, even if ByteDance is willing to sell.
Will ByteDance Sell Its Stake?
Meanwhile, a potential TikTok acquisition by US-based entities is contingent upon two things. The first is, of course, ByteDance agreeing to sell its stake, as in the past, the company has strongly opposed any forced sale. Moreover, the deal would likely need the blessings of Chinese President Xi Jinping. While Trump has expressed faith that Xi “will probably do it,” it remains to be seen whether the country agrees to such demands, as it might lead to similar demands in other countries also.
Then there is the legal challenge as the US Supreme Court held the constitutionality of the TikTok ban, which Trump’s Justice Department hasn’t enforced yet on his orders. Some legal experts believe that a TikTok sale might face challenges if it does not comply with PAFACA.
While that act listed divesture of stake as an option to evade a ban, it listed two clauses for the divesture to be termed “qualified. Firstly, it said, through an interagency process, the President determines that the divesture “would result in the relevant foreign adversary controlled application no longer being controlled by a foreign adversary.” Secondly, the President precludes that there is no “operational relationship” between the company’s US operations to any entity controlled by a foreign adversary (read China.)
All said, it remains to be seen if TikTok is sold this time around or whether the President flip-flops yet again.