Can TikTok survive its takeover turmoil?
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A last-minute intervention by Beijing made the battle over the future of TikTok's social network even more complicated, said Zheping Huang and Colum Murphy at Bloomberg. Last month, Trump threatened to ban the Chinese-owned network, immensely popular with youth around the world, over concerns it could share data with China's government. Software giants Microsoft — allied with Walmart — and Oracle issued competing bids for TikTok's U.S. operations. But China "threw a wrench" into the plans this week. Much as the U.S. has used export rules to limit how U.S. companies work with China, China has put the "personalized recommendation" algorithms that TikTok is built on in a list of 23 products now requiring approval before being sold overseas. China is trying to "prevent what state-run media called the 'theft' of technology." Zhang Yiming, founder of TikTok parent ByteDance, may still pursue a deal, but China's regulators could also hold up an agreement until after the U.S. elections in November.
Walmart's entry into the TikTok sweepstakes last week highlighted the app's wide-ranging appeal, said Raymond Zhong at The New York Times. The huge retailer's team-up with Microsoft raised some eyebrows. But you can look to China to see why this makes sense. "Chinese e-commerce platforms have been adding livestreaming to their apps for years, and video apps have been adding shopping functions." That could be a model for Walmart. Merchandise sold via livestreaming in China is expected to reach $140 billion this year.
To make that work, though, any U.S. buyer would need TikTok's secret sauce, said Tim Culpan at Bloomberg, and it's not clear China will ever let that happen. "Imagine a bidder for KFC being told the deal might not include the Colonel's 11 secret herbs and spices." That's effectively what China just told TikTok's pursuers. While data is what put TikTok in this mess, "it's really the algorithms that matter most to the company" and keep users glued to their phones. Beijing is "threatening to kill TikTok to save it," said Pete Sweeney at Breaking Views. Trump's strong-arming has understandably "played poorly in the People's Republic." Americans would react the same way if China's president demanded that "Apple sell its Chinese unit — and its source code — to a Chinese buyer or be kicked out of the country." Rather than allow Washington to set that kind of precedent, China may put TikTok out of its misery.
TikTok is already declining in value, said Dan Gallagher at The Wall Street Journal. In May, it hired Kevin Mayer, once considered the heir apparent to Bob Iger at Disney, as its new CEO. But all the turmoil and the prospect of a sale led Mayer to quit last week rather than "become middle management" again at another tech giant. There's another reason I'm not confident TikTok will survive this turmoil, said Casey Newton at The Verge. It "was able to fend off fierce competition from Facebook and Snapchat" thanks to a "remarkably adept and focused ByteDance team" in a hypercompetitive environment. Microsoft, Walmart, and Oracle can't replicate that culture.
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