ByteDance weighs selling stake in TikTok after US claims security threat

ByteDance has emerged as the world's most valuable startup on the explosive popularity of TikTok, where more than a billion, largely young, users share short clips of lip-syncing and dance videos.

BS : China’s ByteDance Inc. created one of the country’s rare global hits with the addictive video app TikTok. Now the US government is threatening that success as officials in Washington warn the service presents a security threat.

The Beijing-based company, led by Chief Executive Officer Yiming Zhang, is weighing a range of options to address those concerns, according to people familiar with the matter. Advisors are pitching everything from an aggressive legal defense and operational separation for TikTok to sale of a majority stake, said the people, asking not to be named because the discussions are private. Selling more than half the business could raise substantially more than $10 billion, one person said.

ByteDance would prefer to maintain full control of the business if possible, given its soaring popularity and profit potential. It may argue that TikTok presents no security threat or that the US has no legal standing over the business.

ByteDance has considered selling a chunk of TikTok if necessary to protect the value of the business, the people said. The most likely sale scenario would be for the company to sell a majority stake to financial investors, one person said. Earlier investors include SoftBank Group Corp, Sequoia Capital and Susquehanna International Group.

Talks about TikTok’s future are preliminary and no formal decision has been made, the people said. A representative for the company said there have been no discussions about any partial or full sale of TikTok. “These rumors are completely meritless,” the representative said.

ByteDance has emerged as the world’s most valuable startup on the explosive popularity of TikTok, where more than a billion, largely young, users share short clips of lip-syncing and dance videos. But with escalating tensions between China and the US, American politicians have warned the app represents a national security threat and urged an investigation. The Committee on Foreign Investment in the US, better known as CFIUS, has begun a review of ByteDance’s 2017 purchase of the business that became TikTok, Bloomberg News reported in November.

“I remain deeply concerned that any platform or application that has Chinese ownership or direct links to China, such as TikTok, can be used as a tool by the Chinese Communist Party to extend its authoritarian censorship of information outside China’s borders and amass data on millions of unsuspecting users,” Senator Marco Rubio wrote in a letter to the Treasury Department, which chairs CFIUS.