Latest News on TikTok Purchase Deal: What Buyers Want, Influence of Chinese and US Authorities
The deal on the purchase by Microsoft of the American part of the business of the social network TikTok has become one of the main sagas of the last month. Throughout the negotiations with the Chinese company ByteDance, which owns the service, the statements of US President Donald Trump had a serious impact on their course.
In our new article, we look at what stage the deal is at now, what confuses buyers, and how they react to all this in China itself.
Influence of the US President
In early August, Donald Trump announced that he planned to ban TikTok in the United States to prevent the company from transferring data from American users to China. Trump said the only way to avoid the ban was the sale of the American company before September 15.
The President of the United States confirmed his intentions with two decrees prohibiting US citizens to carry out transactions and conduct transactions with Chinese companies ByteDance and Tencent and related legal entities.
Who wants to buy TikTok
The main contender for the purchase of the American business of TikTok is Microsoft, Wal-Mart also decided to participate in the deal, and Oracle also submitted a separate application. According to insiders, the negotiated price of the deal ranges from $ 10 to $ 30 billion – it all depends on which part of the company and in what form will be sold.
What could go wrong
According to CNBC, ByteDance has found buyers not only for the American segment of TikTok, but also for part of the business in New Zealand and Australia. At the same time, ByteDance stated that it would not be possible to carry out the deal just like that – it must be approved by the Chinese government. And this is where the main difficulties begin.
Despite the fact that journalists predicted the transaction was closed on September 1, 2020, this did not happen. The Wall Street Journal found outthat application algorithms became a stumbling block in the negotiations.
The algorithms that determine which videos are shown to users are considered to be TikTok’s core technology know-how. Until the last moment, buyers believed that algorithms would be included in the deal. However, the Chinese government subsequently published new restrictions on the export of artificial intelligence technologies. It is now completely unclear whether these limitations will affect TikTok’s algorithms.
For shoppers, a TikTok deal that won’t include the very algorithms that keep user engagement at an extremely high level looks less than compelling.
At the same time, insiders say that there is a possibility of buying only a user base of an application without algorithms – then buyers will have to develop them anew.
Why everyone needs TikTok algorithms
The success of TikTok is largely due to the quality of the personalization algorithms used in the app. Using AI and machine learning technologies, ByteDance was able to train the app to show users the videos that are most likely to grab their attention – all based on data from previous interactions with the product.
As a result, users are actively “sticking” to the application, and their number is growing. At the beginning of 2018, there were about 11 million of them, and now the monthly audience of TikTok exceeds 100 million people.
According to sources familiar with the discussions, the Chinese government has introduced new restrictions in response to the activity of the US President, who forced the Chinese company to sell popular technology. The two countries have been in a state of trade war for quite some time that affects all more IT companies…
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