The company believes that the solution would be to hire third-party companies to manage the data and prevent it from reaching China, but they could be considering the option of selling.
US Threatens to Ban TikTok
Government bans on using TikTok on official devices in the United States, the European Commission, Canada, Lithuania, Latvia, and Denmark are mainly due to the connection the app has with ByteDance. The Chinese parent company ensures that the stored data is not reviewed by the Chinese government, however, politicians do not want to take risks.
Faced with the decision of several Western governments to deny the use of the app on official mobile phones, TikTok has defended itself. But, to avoid further concerns about national security risks, it could disassociate itself from ByteDance.
This possible sale comes at a time when the United States has given the Asian firm an ultimatum if it wants to continue operating in the territory. The Committee on Foreign Investment in the United States (CFIUS) has required the parent company to redo its shares to prevent too much of it from being managed in China.
The Wall Street Journal reports that, currently, 60% of the shares belong to global investors, 20% to its employees, and another 20% to its founders.
The position that TikTok has shared is that “if the goal is to protect national security, divestment does not solve the problem.” “A change of ownership would not impose new restrictions on data flows or access,” they comment. “The best way to address concerns about national security is through transparent and US-based protection of data and information systems.” US users, with robust third-party monitoring, investigation, and verification, which we are already implementing.”
Despite this, Bloomberg points out that the company is considering a divestment that could lead to a sale or an initial public offering of TikTok. The people familiar with the matter who have spoken to the media explain that this measure is still being discussed and that it will only be taken in case the company’s current proposals with government officials are not approved.
Mandeep Singh and Damian Reimertz, analysts at Bloomberg Intelligence, estimate that TikTok could be valued between $40 billion and $50 billion. Its sale would mean that the application ceased to belong to a Chinese company and, therefore, politicians who fear that consumer information is under the control of the Asian government have nothing to worry about.
It should be noted that TikTok has previously taken steps to combat mistrust from the West. In the United States, they turned to the technology giant Oracle to manage the data of American users from the country and not accuse them of being able to violate data protection laws. They intend to follow this same proposal in Europe.