The US Congress has passed a bill that could force TikTok to be sold in the US within a year or otherwise be banned altogether.
👉 Background: TikTok became the fastest social media app to hit 1 billion users and is now used by over 170 million Americans and 8.5 million users in Australia. But over the years, the US has developed concerns around national security because TikTok is owned by Chinese-based Bytedance.
👉 What happened: Now, the US Congress has passed a bill that could force TikTok to be sold in the US within a year or otherwise be banned altogether. And Australia could follow too.
👉 What else: The US government is concerned that Chinese authorities could:
If this bill doesn’t face legal challenges, Bytedance will need to sell TikTok in the US, including its algorithm.
💡Forced sales can disrupt the normal business valuation process. In these types of deals, the seller lacks the leverage typically used to maximise the selling price.
💡 In TikTok’s case, the pool of potential buyers who could afford and manage such a big acquisition is limited mostly to major tech companies. Think: Meta, Microsoft or Google.
💡But these companies are often under scrutiny for potential antitrust/anti-competitive issues. For example, Meta acquired GIPHY for $400m USD in 2021 but then was forced to sell it due to anti-competitive regulations for just $53m in 2023. Overall, these factors make this deal less attractive to potential buyers
Sign up for Flux and join 100,000 members of the Flux family
