TikTok could be Traded off by Chinese owner to shield it from US ban

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TikTok has surged in popularity but is increasingly viewed with suspicion in the US

The embattled viral video app TikTok could be split off from its Chinese parent company and sold to investors in the United States in order to shield it from regulatory wrath, according to reports.

ByteDance, the $110bn (£86bn) Beijing start-up behind TikTok, is said to be discussing the plan with a small group of its US investors, who would buy a majority stake in the app.

Insiders told Silicon Valley news website The Information that the plan was tentative and preliminary, representing only one possible solution to the threat that US might follow India in banning TikTok entirely.

A spokesman for TikTok said: “As we consider the best path forward, ByteDance is evaluating changes to the corporate structure of its TikTok business.

“We remain fully committed to protecting our users’ privacy and security as we build a platform that inspires creativity and brings joy for hundreds of millions of people around the world.

“We will move forward in the best interest of our users, employees, artists, creators, partners, and policymakers.”

That stood in sharp contrast to TikTok’s categorical denial of a similar story last year, when it claimed there had been “no discussions about any partial or full sale”.

It comes after the US House of Representatives voted on Monday to ban all federal government employees from installing TikTok on their work phones.

Mike Pompeo, the Secretary of State, had already hinted that his government might follow the example of India’s, which banned TikTok last month as part of a purge of Chinese apps amid an ongoing border crisis.

ByteDance’s sale discussions have reportedly included Zhang Yiming, the company’s founder and chief executive, and Neil Shen, a board member and a partner at Sequoia Capital’s Chinese branch.

The plan would require investors such as Sequoia, General Atlantic and New Enterprise Associates to form a consortium, with ByteDance potentially maintaining a minority stake.

A formal split could insulate TikTok from widespread suspicion that it could be used as a tool of Chinese state surveillance, as well as allegations that it has enforced Communist Party censorship on its Western users.

But it would also bring serious complications. TikTok shares key technology with its Chinese version, Douyin, making them difficult to untangle. A US-based TikTok might even have to compete with future ByteDance apps in overseas markets.

TikTok’s explosive audience growth might also demand a higher price than US investors are willing to pay, with some investors putting its value north of $40bn.

ByteDance has already signaled a strong desire to distance itself from TikTok, hiring former Walt Disney executive Kevin Mayer as the US app’s new chief executive and promising to hire another 10,000 US staff over the next three years.

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