Time running out for TikTok in the U.S.

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This coming Tuesday might be a crazy day. On September 15th, Apple will host a virtual event during which we expect to see the fourth-generation iPad Air introduced along with the Apple Watch Series 6 and possibly more. Also, September 15th is the last day that TSMC can ship chips to Huawei without needing a license from the U.S. Commerce Department. TSMC is the world’s largest contract foundry and Huawei was its second largest customer. A new rule announced by the U.S. in May does not allow a foundry to ship chips to Huawei without approval from the U.S. government if those chips were built using U.S. technology. This has put Huawei in a bind, obviously.

TikTok could be forced to close its U.S. operations this coming week

And September 15th is also the deadline that President Trump has given TikTok parent ByteDance to divest itself of the short-form video app’s U.S. operations or get shut down in the states. Because of the amount of time it takes for a regulatory review of a TikTok purchase to be completed, the chances are that the deadline will pass with no deal. And that means that the app will be forced to shut down in the states. Just the other day, Trump said that there will be no extension granted to ByteDance. Because the latter is a Chinese company, the fact that TikTok has over 100 million U.S users has the U.S. government worried that personal data is being collected by TikTok and sent to Beijing. That fear persists even though TikTok uses two servers to store this information; one is in the U.S. and the other is in Singapore.

TikTok has been installed over two billion times from the App Store and the Google Play Store. The app has been very much in demand during the pandemic as U.S. teens and others created TikTok videos to pass the time while stuck at home. Content created on TikTok includes lip-synch videos, pranks, dances, and more. Several U.S. companies have expressed an interest in buying TikTok including Microsoft, Oracle, Twitter and Walmart.

Besides the aforementioned September 15th deadline, the executive order signed by Trump last month requires TikTok to start acting on a sale of the company by September 20th.
And yet, another decision made by the Committee on Foreign Investment in the United States, (CFIUS), requires TikTok to be sold by the middle of November. CFIUS is the U.S. regulatory agency that clears foreign acquisitions of  U.S. companies. ByteDance has filed a lawsuit against the U.S. government claiming that its due-process rights were trampled on by the U.S. government since it was not given the right to respond to the executive order filed against it.

TikTok’s parent company notes that in addition to the 100 million U.S. users of TikTok, 1,500 Americans work for the company. But as ByteDance was negotiating a deal with some companies, China added a new rule at the last moment that restricted the transfer of AI technologies out of China. ByteDance was said to have been blindsided by this move. Those involved in the transaction say that the AI restriction wasn’t meant to block a deal, but only to slow one down. After all, even if Microsoft or Oracle aren’t allowed to access TikTok’s algorithms, both tech firms have the wherewithal to create their own.

ByteDance originally tried to negotiate a piece of TikTok for itself in any deal, in any deal, but the trump administration didn’t like that idea. One source said to be familiar with the negotiations, said that Microsoft and Walmart, partnering up on a bid, want to own the complete business. It is unclear what position Oracle is taking on this.

TikTok’s U.S. business could have a valuation in the range of $20 billion dollars in a deal. Its worldwide operations might be worth $50 billion to $100 billion.

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