Sat, 09/19/2020 – 18:30
During a briefing with reporters at the White House on Saturday, President Trump confirmed that he had signed off on a proposed deal that would involve spinning off TikTok’s global business into a standalone, US-based company owned by Oracle, ByteDance, Wal-Mart, a group of Silicon Valley VC firms and other investors from China.
“I have given the deal my blessing, if they get it done that’s great, if they don’t that’s fine too,” President Trump told reporters at the White House on Saturday.
Of course, CFIUS still needs to technically sign off on the deal. But that’s not the only obstacle remaining in the way of a spinoff that company insiders say could lead to a US public offering roughly one year from now if everything works out.
Trump’s comments come after the Commerce Department on Friday issued regulations prohibiting American companies from providing downloads or updates for TikTok after 11:59 pm on Sunday. The order also applies to WeChat, another popular Chinese-owned messaging and payments app, that will be subjected to the ban – at least in the US market (the administration has promised that any restrictions won’t apply to American companies doing business in foreign markets like China).
In a statement, TikTok said its “proposal” to Washington included “unprecedented levels of transparency.”
During an earlier briefing on Friday, Trump called TikTok “a pretty incredible asset” and said that the companies appeared close to a deal that would ameliorate security concerns from a group of GOP senators.
If the deal is ultimately structured like a spinoff, regulators in Beijing will likely need to sign off as well, which could create problems. However, there’s been some talk about ByteDance selling TikTok without the content recommendation algorithm at its heart. Beijing has already confirmed, via a leak to the SCMP, that it won’t allow an American company to walk away with TikTok’s algorithm.
ByteDance has already sought help from American courts, arguing that President Trump’s ban was illegal under American law. Unfortunately for the company, invoking “national security” gives Trump broad latitude to act; the courts don’t have much latitude to restrain him, according to Bloomberg.
Following the Commerce Department’s latest order, the company filed another lawsuit late Friday seeking to stop the Commerce Department’s order forcing Apple and Alphabet to drop TikTok from their app stores. TikTok owner ByteDance said it dropped its lawsuit against the Trump Administration, which it filed in California, and filed a new lawsuit in Washington. The company argued that Trump’s ban is “political” in nature, and that Trump is only using national security as a ruse.
TikTok also claimed that the ban violates first amendment protections on free speech.
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Author: Tyler Durden
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