After a fresh US legal move against ByteDance on Friday, analysts say that TikTok’s Beijing-based owner now has slightly longer to pull off a sale of its US operations, but at the same time the Trump administration has strengthened its hand against the Chinese technology company.
President Donald Trump ordered ByteDance on Friday to divest the US operations of its video-sharing app TikTok within 90 days, ramping up pressure on the Chinese company over concerns about the safety of the personal data it handles.
ByteDance did not immediately respond to a request for comment.
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“I think it’s clear that Trump is being pressured to extend the deadline by tech companies like Microsoft, or investors like Sequoia because the original 45 day deadline was way too short,” Shaun Rein, managing director of China Market Research Group, told the Post on Saturday.
Trump’s latest move against the global short video sensation comes on top of an executive order he issued last week that would prohibit certain transactions with TikTok unless ByteDance divests it within 45 days. The action forms part of a broad drive by the Trump administration to “clean” the US internet of Chinese influence amid a tech and trade stand-off between the world’s two-biggest economies.
ByteDance is already in talks to sell the US, Canada, Australia and New Zealand operations of TikTok to Microsoft, among other suitors, although Microsoft co-founder Bill Gates was quoted in a Wired magazine interview describing the potential acquisition as a “poisoned chalice”.
Analysts have said that Trump’s previous executive order fell short of clarifying how the app threatens American security and that to force a sale of TikTok’s US operations within 45 days was more likely to lead to chaos than to a resolution.
“A regular deal takes about five to six months,” Chris Griner, who focuses on national security issues for merger deals at the law firm Stroock & Stroock & Lavan, told the Post earlier. “Now you’ve also got to throw in the government and make sure they're happy with the transaction.”
TikTok has threatened to take legal action against Trump’s earlier executive order but a federal lawsuit has yet to be filed.
But Jeffrey Towson, a former professor of investment at Peking University, said the new order may be more difficult to challenge legally.
“[The new order] doesn’t say this is banned in the US,” Towson said. “What it says is Chinese companies can’t own it. So, in that sense, it’s harder to challenge that legally. It doesn’t make US consumers who like to use TikTok annoyed because they can still use TikTok. It’s not a ban.”
Friday’s announcement also authorises US officials to inspect TikTok and ByteDance’s books and information systems, to ensure the safety of personal data while the sale talks are ongoing. Among other things, the order requires ByteDance to destroy any data from TikTok users in the United States.
However, one lawyer said it may not be so easy for US authorities to get access to this information.
“The US government also has to go through a formal process to get information and data about Bytedance in the US,” said the lawyer from an independent law firm, who declined to be named as she was not authorised to speak by her company. “ByteDance has an obligation to protect its users’ information and data, and in general that can not be disclosed without a search warrant, court order, or other statutory means.”
While analysts have said that suspicion of Chinese technology cuts across the US political spectrum, Rein said pressure against Chinese companies is likely to intensify in the run up to the election in November. “It’s going to just get more and more, you know … is Alibaba going to get hit? Is Xiaomi going to get hit?”
(Alibaba is the parent company of the Post.)
“My expectation is you're going to have three or four stories every week until the election. They’re going to go after something different every day,” Rein said.
This article ByteDance may have slightly longer to sell TikTok but Trump has also strengthened his hand, analysts say first appeared on South China Morning Post