TikTok Equity Transfer : New Developments in the U.S.-China Rivalry and an Analysis of the Trump Administration's Interests
- FOFA
- Oct 2
- 3 min read
As the process of TikTok's equity transfer in the United States becomes clearer, the event has evolved beyond a mere commercial transaction to profoundly reflect the power struggle and strategic maneuvering between the United States and China in the technology sector. Recently, ByteDance's TikTok U.S. operations are facing a legal requirement to be divested, a decision made by the U.S. government to address national security and data privacy concerns.
Legal Background and Equity Transfer
According to the "Protecting Americans from Foreign Adversary Controlled Applications Act" passed in April 2024, ByteDance must divest its TikTok business in the United States by early 2025. If it fails to do so, the application will face a ban in the United States. This legal background provides the direct impetus for TikTok's equity transfer.
However, as the transaction proceeds, ByteDance still faces significant legal challenges. TikTok and ByteDance have filed a constitutional lawsuit against the law, alleging that it infringes on freedom of speech and has other legal flaws. The outcome of this legal battle will have a profound impact on TikTok's future.
The Trump Administration's Interests
During the Trump presidency, the tough stance on TikTok was not solely based on security considerations but also involved various political and economic interests:
Political Base:
The Trump administration, elected in 2016, emphasized an "America First" policy aimed at protecting American workers and businesses. The stringent measures against TikTok catered to the cautious sentiment of its supporters towards foreign companies and helped strengthen its image among voters.
Economic Interests:
Selling parts of TikTok's business to American companies could boost the domestic economy, especially in support of the technology industry. This would attract the interest of American investors, such as Oracle and Silver Lake, and could potentially create more job opportunities.
Geopolitical Strategy:
Against the backdrop of the U.S.-China trade war, exerting control over TikTok reflected U.S. concerns about China's technological rise. The Trump administration attempted to use this measure to limit the influence of Chinese companies in the U.S. market in order to maintain America's technological leadership.
Data Security and Privacy Concerns:
The Trump administration emphasized data security issues, arguing that Chinese companies could use data for espionage. This argument largely provided legitimacy for its policy and garnered broader public support for its hardline stance on TikTok.
Changes in Equity Structure
In the new equity structure, investors such as Oracle, Silver Lake, and Abu Dhabi's MGX will collectively hold approximately 45% of the shares, while ByteDance's shareholding will be reduced to below 20%. This change is not just a strategic business adjustment but also a response to the U.S. government's demands, aimed at ensuring data security and eliminating foreign influence.
The newly formed joint venture will be led by a U.S.-majority board of directors, meaning ByteDance's decision-making authority over its U.S. operations will be limited. This change in equity structure demonstrates the United States' firm position on protecting its national data and market security.
The Chinese Government's Reaction
Meanwhile, the Chinese government opposes the forced sale of TikTok. China's Ministry of Foreign Affairs has explicitly stated that any transaction involving TikTok must comply with Chinese law and emphasized that it will not readily approve the export of related technologies. This position demonstrates China's firm stance on national security and technological sovereignty.
Conclusion
The TikTok equity transfer process is more than just a business deal; it is a contest between the U.S. and China on multiple fronts, including technological sovereignty, data security, and freedom of speech. The interests considered by the Trump administration add a layer of complexity to the event. Future developments will depend on legal rulings and the policy directions of both governments. As the global trend of digital platform regulation intensifies, the TikTok case will serve as a significant reference for how international technology companies navigate geopolitical challenges.
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