New York
CNN
–
After previously rejecting the idea of a sale of TikTok to avoid an impending ban, the Chinese government may have found an owner it can live with: Elon Musk.
Chinese officials — who are expected to have some say in whether and how TikTok’s U.S. assets could be sold to an American buyer — are discussing a possible option that involves selling at least part of the U.S. version of the app to Musk’s X, according to reports from Bloomberg and the Wall Street Journal. CNN has not independently confirmed the discussions.
The discussions would mark a sharp reversal in China’s stance on the sale of TikTok just days before the law that could ban the app in the United States takes effect. To avoid a ban, the law would allow TikTok’s parent company, ByteDance, to sell to a US-based owner.
The reports come after the Supreme Court last week indicated it would uphold the law on national security concerns, despite TikTok’s argument that it represents an illegal crackdown on free speech. China’s Ministry of Commerce previously said it would “strongly oppose” a forced sale of TikTok, although other potential buyers raised their hands. TikTok parent company ByteDance has also previously indicated that the app is not for sale.
ByteDance and Musk did not respond to requests for comment on the reports. And TikTok hit them; Spokesman Michael Hughes told CNN that “we cannot be expected to comment on pure fiction.”
However, there are logical reasons why Musk, ByteDance and China may all find it in their best interest to facilitate the sale of TikTok’s assets to X’s owner.
ByteDance might just want to win SOMETHING for the US version of TikTok before it loses access to the valuable US market.
For China, the sale to Musk could mean putting TikTok in the hands of an ally, one whose business empire is deeply dependent on the Chinese market and who has the ear of President-elect Trump at a time when China will seek leverage in negotiations for fees. .
For Musk, buying TikTok and preserving Americans’ access to the app at the last second after TikTok fought the ban on First Amendment grounds would play directly into the billionaire’s (often hypocritical) image of himself as a defender of free speech. free. That would give him control over an even bigger and more influential social media platform than X, which he has already successfully used to advance his interests, including helping to re-elect Donald Trump. And Musk already has a team — however small — at X familiar with managing a social media algorithm and ad sales.
in can hear the buzz about it now to see how people feel about it.
“My bet is that Musk or the Chinese will see the reaction,” James Andrew Lewis, director of the strategic technologies program at the Center for Strategic and International Studies, said in an email to CNN. “The Chinese are probably figuring out where it would fit in a larger deal with Trump, but I can’t see them giving it away for free.”
But such a deal could still face real hurdles, including Musk securing the money to buy an app in a deal that could cost $40 billion to $50 billion, according to Wedbush analyst Dan Ives.
ByteDance is expected to need the Chinese government’s sign-off to sell TikTok’s US operations because of export restrictions that could prohibit the sale of sensitive technology, such as the app’s recommendation algorithm, without a license.
And if the company’s legal challenge to the Supreme Court fails, Musk could be seen as the most China-friendly American buyer, given the significant amount of business he does in the country.
China is Tesla’s second largest market; in the third quarter of 2024 alone, Tesla earned $5.7 billion in revenue from China. Tesla’s Shanghai Gigafactory, which Musk has praised as building the company’s highest-quality cars, is also among the company’s most productive factories. And the company is also in the process of building a massive battery factory in Shanghai.
Musk has held numerous meetings with Chinese officials in recent years, including a conversation with Chinese Premier Li Qiang in Beijing last April, during which the official praised Tesla as a “successful model” for US-China cooperation. “Tesla is willing to further deepen cooperation with China and achieve more favorable results,” Musk told Li during the meeting.
Although Musk has portrayed himself as a crusader for free speech in the United States, he has remained relatively silent on the subject when it comes to China, which has arrested political rivals of Chinese leader Xi Jinping on an unprecedented scale that when Xi took power in 2012. .
Musk has also referred to Taiwan as an “integral part of China,” angering the Taiwanese leadership.
“One of the biggest investors in China from an infrastructure standpoint is Tesla, so Musk’s relationship inside Beijing, outside of Apple’s Tim Cook, is probably the strongest of any American business person,” Ives told CNN. However, Ives said China is unlikely to allow the sale of TikTok with its algorithm, which he called the “core DNA” of the popular app.
China may also want to use Musk to get to Trump. A TikTok deal could serve as leverage in negotiations with the next administration to avoid massive tariffs the president-elect has threatened to impose on goods imported from the country, which could cause major companies produce fewer goods there. After donating to Trump’s re-election campaign, Musk has become one of his closest advisers and has reportedly joined calls between the incoming president and other world leaders.
And if Trump gives his blessing, the next president could also use the deal to claim he kept his promise to save TikTok for Americans. The TikTok ban or sale law gives the president discretion to decide whether a so-called “qualified distribution” of the app has actually occurred to allow TikTok to continue operating in the United States.
“Musk’s significant financial resources, established business connections in China through Tesla, and prominence in the social media industry through X make him a likely candidate for brokering a deal acceptable to many of the parties involved.” interested,” Dimitar Gueorguiev, an associate professor of political science at Syracuse University. said the emailed comment.
For Musk and X, buying TikTok could be a “golden asset pick-up,” Ives said. TikTok’s 170 million US monthly users would be a huge boost for Musk’s social media company. And their videos could also provide useful training data for Musk’s artificial intelligence company, xAI.
A big question over any discussion of a Musk acquisition of TikTok is likely to be how he would go about it.
Although Musk is among the richest people in the world, most of his wealth is tied up in shares of Tesla and his other companies.
And after his money-losing purchase of X, formerly Twitter, more than two years ago, Musk may have a harder time finding financing partners for a TikTok offering, though the short-form video app almost certainly has a more profitable advertising business than X .
Musk’s $44 billion purchase of Twitter was always overpriced, and the subsequent billionaire’s purchase post-acquisition decisions further weighed down the social media company’s value. This has reportedly left the banks that lent the money to buy Twitter unable to discharge the debt without losing money, leaving them with huge stains on their balance sheets.
There are limits on how Musk can use the $170 billion in Tesla stock he owns outright as collateral for loans. However, banks may be interested in working with Trump’s “first mate,” whose other companies are also expected to benefit from his connection to the White House. Musk’s net worth has increased since the election.
Even if Musk were to buy the app, there’s no telling if TikTok’s users will stick around under a new owner.
Many frustrated users left X following Musk’s takeover after he changed its recommendation algorithm, removed the company’s trust and security team, and reinstated previously banned accounts, including white supremacists, leading to an increase of hate speech and misinformation. Musk himself has also fueled racist conspiracy theories on the app.
Some TikTok users responded with excitement to reports of Musk’s potential purchase, including one user who posted a dance video celebrating the news.
“The idea of TikTok going away is scary. But you know what’s scarier? Elon Musk owns it,” a user named Omie said in a video on Tuesday. “I’d rather have this app banned than have that pickup truck mom. I mean, honestly, the idea of this going back to Twitter is scary.”
Another user who goes by Mo said in a video: “I love TikTok bro but why does it have to be Elon Musk? He’s already running Twitter (on) the ground.” One commenter said on that video, “I’d rather China have my information than Elon.”
And TikTok user Dash Dobrofsky said in a video titled “Oh Dear God Please No” that Musk’s acquisition of TikTok “sounds like a terrible idea… It would definitely make Elon Musk the man most powerful in the world”.
Such a user revolt could ultimately undermine the value of the platform for Musk and any investors he might be able to raise for a TikTok purchase.
