Chinese authorities are evaluating a possible alternative that involves acquiring the US operations if the company is unable to avoid a controversial ban on the short video app, according to sources familiar with the matter.
Officials in Beijing prefer TikTok to remain under parent ownership, sources say. The company is challenging the impending ban with an appeal to the US Supreme Court. However, oss on January 10 that they will likely maintain the legislation. Chinese officials have already begun discussing contingency plans for TikTok as part of broad discussions about how to deal with the government. One of those options involves Musk, the sources said, requesting anonymity due to the confidentiality of the conversations.
A potential deal with one of Trump’s closest allies has some appeal to the Chinese government, which is expected to have influence over the eventual sale of TikTok, the sources said. and it was.
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In one of the scenarios discussed by the Chinese government, Musk’s X — formerly Twitter — would take control of TikTok in the US, integrating the businesses, the sources said. With more than 170 million users in the US, TikTok could strengthen X’s efforts to attract advertisers. Musk also founded a separate artificial intelligence company, , which could benefit from the huge volumes of data generated by TikTok.
The discussions are still preliminary, and Chinese authorities have not reached a consensus on how to proceed, the sources said. It’s unclear how aware ByteDance is of the Chinese government’s discussions or whether TikTok and Musk are involved. There is also no information about possible negotiations between Musk, TikTok and ByteDance.
Representatives for Musk did not respond to requests for comment. In April, . “In my opinion, TikTok should not be banned in the US, even if such a ban could benefit platform X,” he wrote on X. “To do so would be contrary to freedom of expression and freedom of expression. That’s not what America stands for.”
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Representatives from ByteDance, TikTok, the Cyberspace Administration of China and the Chinese Ministry of Commerce also did not respond to requests for comment.
Discussions in Beijing suggest that TikTok’s future may no longer be under the sole control of ByteDance, the sources said. Chinese officials acknowledge they will face difficult negotiations with the Trump administration over tariffs, export controls and other issues, and see talks over TikTok as a possible area of compromise.
The Chinese government has a so-called “golden share” in an affiliate of ByteDance, which gives it influence over the company’s strategy and operations. TikTok says this control only applies to its Chinese subsidiary Douyin Information Service and does not affect operations outside of China. However, China’s export rules prevent Chinese companies from selling their software algorithms, like the one that is fundamental to TikTok. Thus, the Chinese government would have a significant say in any sale negotiations.
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Bloomberg Intelligence analysts estimated last year that TikTok’s U.S. operations could be worth between $40 billion and $50 billion. Even for the richest person in the world, this is a substantial amount. It’s unclear how Musk would finance the transaction, whether it would require the sale of other assets or whether the U.S. government would approve the deal. It paid $44 billion for Twitter in 2022 and is still paying off significant loans.
Musk is well-regarded by many ByteDance employees in China and is considered a successful entrepreneur with experience dealing with the Chinese government through his company, a source said.
ByteDance leaders have emphasized that their priority is fighting US legislation that requires the sale or closure of TikTok’s US operations due to national security concerns. TikTok’s lawyers argued that the legislation violates free speech laws protected by the First Amendment of the U.S. Constitution.
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The Supreme Court has indicated that national security concerns may take priority over free speech, but has not yet issued a formal ruling. President-elect Trump, who takes office on January 20, tried to delay the ban on TikTok — which goes into effect on January 19 — to negotiate a deal. , and there is speculation that it could take last-minute steps to avoid the ban.
In practice, separating TikTok’s American operations would be highly complex, impacting shareholders in China and the US. Lawyers for TikTok argued to the Supreme Court that such a separation would be “extraordinarily difficult.”
It’s unclear whether TikTok’s U.S. operations would be sold through a competitive process or arranged by the government. Billionaire Frank McCourt and Kevin O’Leary of Shark Tankare participating in a proposal through Project Liberty to acquire TikTok, which O’Leary said he discussed with Trump. In the past, Microsoft has attempted to acquire the business, and Oracle maintains a deep technology partnership with the company.
Another alternative would be to migrate American TikTok users to a similar rebranded app to potentially bypass the ban, according to one source. It’s unclear how effective this strategy would be.
A person close to the company, who spoke on condition of anonymity due to the sensitivity of the strategy, said before the Supreme Court hearing that the legal battle is still the focus of executives, who would rather continue fighting in the U.S. than sell TikTok and cede control. permanently.
Musk is in a position to influence relations between China and the US as the world’s richest person, with businesses that span the two largest global economies. Tesla, where Musk is CEO, built a factory in Shanghai in 2019 and has since expanded it, making it the company’s largest production base. This helped Tesla increase its market share in China, despite strong local competition, and build a good relationship with government authorities.
While Trump is forming his administration with China critics such as , Musk has been critical of some recent trade policies,
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