In a rapidly evolving scenario, Chinese officials are reportedly contemplating the sale of TikTok's U.S. operations to Elon Musk, the world's richest individual and CEO of Tesla and SpaceX. This development emerges as TikTok faces a potential ban in the United States, set to take effect on January 19, despite recent reports suggesting President Trump might issue an executive order to save the app.
According to a Bloomberg report, while Beijing prefers that TikTok remains under the ownership of its parent company, ByteDance, discussions have begun on contingency plans should the app be unable to avert the impending ban.
One such plan involves Musk's social media platform, X (formerly Twitter), acquiring TikTok's U.S. operations and managing both platforms concurrently. This acquisition could provide X with access to TikTok's extensive user base of approximately 170 million American users, many of whom are already jumping ship to Xiaohongshu or RedNote, as it is known among U.S. users.
The U.S. government's concerns center on the potential for the Chinese government to access American users' data through TikTok, leading to the legislative push for ByteDance to divest its U.S. operations or face a ban. The Supreme Court is currently deliberating on TikTok's appeal against this mandate, with indications suggesting the Court may uphold the law.
Could Elon Musk Jump in the Race?
Elon Musk's potential involvement adds a complex layer to the situation. Musk, who acquired Twitter in 2022 for $44 billion, has since rebranded it as X and has been exploring ways to expand its functionalities and user engagement.
His efforts have positioned X as a dominant force in the digital space, maintaining its status as the leading news app in the United States. As of November 24, 2024, X ranks first in both the Free and Grossing categories on the App Store, highlighting its continued success and relevance in the competitive app market.
𝕏 Numero Uno https://t.co/ekt52xd2HC
— Elon Musk (@elonmusk) November 24, 2024
Integrating TikTok's U.S. operations could align with his vision of creating a multifaceted social media platform. Additionally, Musk has expressed his views that TikTok shouldn’t be banned in the U.S., despite a ban benefiting X.
In my opinion, TikTok should not be banned in the USA, even though such a ban may benefit the 𝕏 platform.
Doing so would be contrary to freedom of speech and expression. It is not what America stands for.
— Elon Musk (@elonmusk) April 19, 2024
Musk’s track record of transforming industries—from electric vehicles with Tesla to space exploration with SpaceX—underscores his ability to tackle ambitious projects.
The potential acquisition of TikTok’s U.S. operations would not only provide access to its massive user base and cutting-edge algorithms but also position Musk as a central player in the battle over data privacy and digital dominance.
However, the deal would face intense regulatory scrutiny in both the U.S. and China, raising questions about how Musk plans to navigate the political and legal complexities involved in such a high-stakes transaction.
Was There Ever a Race to Begin With?
However, the feasibility of such an acquisition remains uncertain. Analysts estimate TikTok's U.S. operations to be valued between $40 billion and $50 billion, a substantial investment even for Musk. This figure excludes the sale of the TikTok algorithm.
Wedbush analyst Dan Ives provides context on the potential number ByteDance could demand for the algorithm, saying:
“TikTok is worth well north of $100 billion with the algorithm — and potentially up to $200 billion in a best-case scenario.”
TikTok's algorithm is central to the app’s user engagement and success. The Chinese government has previously indicated reluctance to allow the transfer of this technology to foreign entities, viewing it as a national asset.
Furthermore, it's unclear whether formal discussions have even taken place between Musk, ByteDance, and TikTok regarding this potential deal. A TikTok spokesperson has dismissed the reports as "pure fiction."
Finally, any potential sale would require approval from both U.S. and Chinese regulatory bodies, adding layers of geopolitical considerations to the financial and technological challenges. Given these factors, the likelihood of Elon Musk acquiring TikTok's U.S. operations appears remote at this juncture.
What’s Next?
China's government holds a "golden share" in the ByteDance subsidiary, granting it influence over strategic decisions. Any sale of TikTok's U.S. operations would likely require Beijing's approval, especially if it involves transferring proprietary algorithms or technology.
As the January 19 deadline approaches, the future of TikTok in the U.S. hangs in the balance. Whether through a sale to a U.S. entity like Elon Musk's X or other means, the resolution of this issue will have far-reaching implications for international business operations, data privacy, and U.S.-China relations.
Moreover, it could profoundly impact thousands of U.S. small businesses and influencers who depend on TikTok as a vital marketing channel and a significant source of income.
