A Blog by Jonathan Low

 

Jan 14, 2025

China Ponders $40-50 Billion TikTok US Operations Sale To Musk

Although TikTok has denied such discussions have taken place, they make sense from China's standpoint. Musk is among Trump's closest advisors, is beholden to China because his largest global Tesla manufacturing facility is in Shanghai and is considered someone with whom the Chinese can do business, meaning that they would expect him to be sensitive to their point of view. 

The sale of TikTok's US operations would be expected to fetch $40-50 billion, a sum which Musk, who has a personal worth of approximately $426 billion, could manage with the help of interested high net worth investors. He purchased Twitter for $44 billion, though it has now lost much of its value due to his highly politicized views. JL 

Stu Woo reports in the Wall Street Journal
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Chinese officials, facing a looming U.S. TikTok ban, have internally discussed options including the possibility of allowing a trusted non-Chinese party such as Elon Musk - one of Trump's closest allies whose largest Tesla plant is in Shanghai - to invest in or take control of TikTok’s U.S. operations. Chinese officials concluded that it was best to let the ban take effect and keep TikTok under ByteDance’s ownership so that negotiations could continue after Trump takes over. Last month, TikTok Chief Executive Shou Chew met Trump at the president-elect’s Mar-a-Lago resort. Chew, who has known Musk for years, has talked to him to seek his opinions about the incoming administration

Chinese officials, facing a looming U.S. TikTok ban, have internally discussed options including the possibility of allowing a trusted non-Chinese party such as Elon Musk to invest in or take control of TikTok’s U.S. operations, people familiar with the discussions said.

China has protested a U.S. law that would ban TikTok in the U.S. unless its Beijing-based parent, ByteDance, divests itself of the operation. The Supreme Court last week seemed inclined to let the law stand. It goes into effect on Sunday unless the court issues a stay. 

It couldn’t be determined whether the Chinese officials had presented the Musk idea to top leadership.

The law is one of many issues straining U.S.-China relations ahead of Donald Trump’s inauguration on Jan. 20. Top leadership in Beijing views openness on TikTok as one possible card to play, with confrontations expected over tariffs and other issues, the people said. 

Trump has said he wants to find a way to let TikTok remain in the U.S.

In discussions to date, officials concluded that it was best to let the ban take effect and keep TikTok under ByteDance’s ownership so that negotiations could continue after Trump takes over, the people said.

In preparing the tool kit for possible options after Trump’s inauguration, officials have examined possible openness to a deal with Musk, one of Trump’s closest allies, the people said. Tesla, the electric-vehicle maker headed by Musk, has a factory in Shanghai, and China is one of its biggest markets.

TikTok says the U.S. ban would violate free-speech protections, while the U.S. government cites the need to protect national security.
TikTok says the U.S. ban would violate free-speech protections, while the U.S. government cites the need to protect national security. PHOTO: KENT NISHIMURA/BLOOMBERG NEWS

Musk has frequently met top Chinese officials and expressed favorable views about the country and its leadership. He owns X, another social-media app. 

Still, any willingness to make a deal would run counter to Chinese leaders’ position that they need to stand up to what they view as an unacceptable American law

“It is sheer robbers’ logic to try every means to snatch from others all the good things that they have,” a Foreign Ministry spokesman said last year.

The Chinese government hasn’t communicated with ByteDance about the contingency plans it has considered, the people said. Beijing wouldn’t order ByteDance to sell the app to a specific investor, they said, but it has a key role to play in the discussions because China’s export controls require government approval for the sale of domestically developed algorithms for recommending content to foreign entities. 

The core of TikTok’s video-sharing app is the algorithm containing software code originally written by its parent, ByteDance, for figuring out what users want to watch and delivering relevant content to them. 

 

Chinese officials have in recent months asked ByteDance about its plans for responding to the U.S. law. ByteDance employees have answered that the company was focusing on the legal battle and was confident it would win, without mentioning other backup plans such as a divestiture, people familiar with the matter said.

Beijing’s potential involvement in a deal to help TikTok avert a U.S. ban could undermine the company’s assertion that it operates independently of Chinese authorities.

“For some, an official move to protect TikTok could suggest that the Communist Party or Chinese government have some particular equity in the firm,” said Ja Ian Chong, a National University of Singapore professor who studies Chinese foreign policy. “This could raise further debate about whether TikTok is a tool” for Beijing.

TikTok says the U.S. law violates First Amendment protections for speech, while the U.S. government says the law is justified by the need to protect national security. Supreme Court justices expressed sympathy for the government’s view, though they also shared some of the speech concerns. A decision is expected as soon as this week. 

Bloomberg earlier reported on Beijing’s discussions about the possibility of a deal with Musk. Asked about that report, a TikTok representative told The Wall Street Journal, “We cannot be expected to comment on pure fiction.”

Last month, TikTok Chief Executive Shou Chew met Trump at the president-elect’s Mar-a-Lago resort in Florida, people familiar with the matter said. Chew, who has known Musk for years, has also talked to the X owner to seek his opinions about the incoming administration, The Wall Street Journal reported in November.

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