Saving TikTok: The Chinese’s surprising offer, and what Musk thinks about it

The hourglass is running out for one of the world’s most popular apps. In less than a week, Tiktok may find itself outlawed in the US – unless a miracle formula is found that will please all parties. At the same time, in the last day it was announced that Chinese government officials, who have so far strongly opposed any change in ownership of the application, are exploring a surprising possibility: the sale American activity for businessman Elon Musk, a close ally of President-elect Donald Trump, and the owner of Tesla and the X network (formerly Twitter).

Is this a solution to a crisis that threatens the future of the social network, which has 170 million American users? Globes is in order.

What is at stake and why now?

The current point in time is critical: on January 19, the law that will ban Tiktok activity in the US is expected to enter into force. The Supreme Court, which discussed the issue last week, is expected to rule on the issue in the coming days. The next day, on January 20, Trump will take office as president. Furthermore , media reports indicate that Beijing, which has so far supported ByteDance, the company that owns TikTok, against the law, has begun to examine various options as part of its efforts to improve Relations with the new American administration, one of the options that stand out as mentioned is a sale to Musk.

Why did Musk’s name come up in the context of a purchase?

Mentioning Musk’s name as a leading candidate for the acquisition of Tiktok is not accidental, but reflects a web of business and political interests. First, his close relationship with Trump, which includes, among other things, a significant contribution of more than 250 million dollars to the election campaign, places him in an excellent starting position. Furthermore, Musk is expected to receive a senior position in the new administration in the area of ​​improving government efficiency. From a business point of view, the possible synergy between TikTok and the X social network it owns, together with the enormous potential of the information TikTok generates for its artificial intelligence company xAI, create a unique business opportunity.

Most important of all is the special relationship that Musk has with China: the success of the Tesla factory in Shanghai has created a positive reputation for him both among ByteDance employees and among the Chinese government, who see him as a familiar and reliable figure. Also, Musk has proven over the years his ability to successfully navigate between American and Chinese interests, which, as mentioned, makes him an ideal candidate for everyone involved in the deal.

What is the economic significance of such a deal?

The numbers behind TikTok are big. Bloomberg Intelligence analysts estimate that its activity in the US is worth between 40 and 50 billion dollars, an amount that poses a significant financial challenge even to the richest man in the world. This is especially so in light of the fact that Musk still carries a heavy loan burden from the purchase of Twitter for 44 billion dollars in 2022.

The main questions that preoccupy investors concern the possible financing structure of the transaction: will Musk have to sell holdings in other companies? Will he recruit partners for the deal? And what will be the position of the regulators regarding the concentration of such significant power in the hands of one person? Also, the need to separate TikTok’s American operations from the Chinese parent company is a potentially complicated and expensive process in itself. All these make the financial question one of the main challenges on the way to realizing a potential deal.

What is Musk’s personal position on the Tiktok issue?

Musk’s stated position regarding TikTok is particularly interesting in light of recent developments. Last April, he spoke out against the ban on the app in the US in a tweet he published on X. He did so while being well aware that such a ban could significantly benefit the platform he owns, which competes for the same target audience and advertising budgets. Musk justified his position in basic American values, Saying: “It would be contrary to freedom of expression” and that “this is not what America represents”.

Who else is competing to buy TikTok?

Although Musk is currently in the headlines, he is far from the only contender in the arena. Billionaire Frank McCourt as well as Kevin O’Leary, known from the TV show “Shark Tank”, are already promoting a purchase offer under the project Liberty. O’Leary even revealed that he had conversations on the subject with Trump. Microsoft, which has shown interest in buying TikTok in the past, may also return to the race. At the same time, Oracle, which already maintains a deep technological partnership with TikTok, is in an interesting strategic position.

It is not clear at this stage if the sale will take place through a competitive process or if the US government will settle the deal directly with a preferred buyer. The complexity of the deal, which is estimated at tens of billions of dollars, and the need for regulatory approvals on both sides of the Pacific Ocean, make any potential contender a significant player in the developing international drama.

What is so complicated about separating TikTok activity in the US?

TikTok’s lawyers describe splitting the American operation from the global company as an “extraordinarily complex task”, for various reasons. First, there is the technological aspect: TikTok’s algorithm, which forms the core of the platform, was developed in China and is protected by strict export laws. Second, in the financial dimension, such a split would have a dramatic effect on shareholders, requiring reassessments of the value of the company and its assets. Third, there is the operational challenge of maintaining the user experience while separating the infrastructures.

One of the interesting options being considered is the transfer of American users to a similar application with different branding, but even here questions arise such as how to preserve the user base, how to transfer their history and content, and what will be the relationship between the new application and the global platform.

These are added to regulatory and legal challenges, while in the background hovers the question of whether it is even possible to carry out such a separation without significantly damaging the business and social value of the platform.

What might be the role of the Chinese government in the deal?

The Chinese government has a “golden stake” in a ByteDance subsidiary, giving it influence over strategy and operations. Although TikTok claims that control is limited to operations in China, Chinese export laws prevent the sale of algorithms to foreign entities without government approval. In addition, Chinese officials have already begun discussions on alternative plans for Tiktok, as part of a broader discussion on cooperation with the incoming Trump administration. However, Beijing’s priority is for TikTok to remain owned by ByteDance. Also, the official involvement of the Chinese government in the deal could undermine TikTok’s claims of independence from the authorities, and strengthen the claims that the application is used as a tool by the Chinese Communist Party.

What is the position of the American Supreme Court on the TikTok issue?

In the hearing that took place a few days ago, the majority of the Supreme Court justices hinted that they would be inclined to support a law that would ban Tiktok’s activities in the US. The judges acknowledged some of the claims made by Tiktok’s lawyers, centering on the allegation of infringement of freedom of expression, but tended to agree with the administration’s position that national security issues overriding considerations of freedom of expression. An official decision on behalf of the court is expected to be published this week.

What is Trump’s position and what is expected in the coming days?

Trump is trying to postpone the ban to allow negotiations, and he has stated that he wants to “save” the app. He may take a last-minute step to circumvent the ban, which should come into effect a day before he takes office. The Chinese government sees the issue as an opportunity for reconciliation with the Trump administration on trade and tariff issues, especially in light of the expected tensions on these issues. Against the background of all this, it is known that TikTok CEO Shaw Chiu met with Trump at Mar-a-Lago last month, and held talks with Musk to better understand the positions of the incoming administration.