Chinese officials are reportedly considering a plan to sell popular video-sharing platform, TikTok, to Elon Musk or another entrepreneur acceptable to the Chinese Government.
This move comes as TikTok faces a potential ban in the United States due to national security concerns, according to US media reports.
The app’s parent company, ByteDance, has been ordered by US lawmakers to divest TikTok’s American operations by January 19 or face a nationwide ban. This deadline coincides with the inauguration of President-elect Donald Trump, who has pledged to reverse the ban.
The Chinese Government, which does not own ByteDance but maintains regulatory authority over its algorithms, is believed to be exploring options for a sale to stave off the ban.
Elon Musk, the billionaire behind Tesla (NASDAQ:TSLA) and SpaceX, has been floated as a potential buyer due to his business ties with China. Tesla generated $22 billion in revenue from China in 2023, where the company also operates its largest factory.
National security and legal challenges
US officials argue that TikTok poses a national security risk, alleging that its Chinese ownership could allow the government in Beijing to access sensitive data about American users.
The US Supreme Court is currently hearing a legal challenge to the ban, with Solicitor General Elizabeth Prelogar emphasising the potential for misuse of TikTok’s data.
“We know that [China] has a voracious appetite to get its hands on as much information about Americans as possible,” Prelogar said.
Supreme Court Justice Brett Kavanaugh echoed these concerns, suggesting that personal data collected by TikTok could be used to compromise future employees of US intelligence or defense agencies.
ByteDance and algorithm ccntrol
Central to the controversy is ByteDance’s proprietary algorithm, which personalises TikTok’s content for users.
Under Chinese law, technology companies are restricted from transferring sensitive algorithms to foreign entities, complicating any sale of TikTok’s US operations. This has led to speculation that ByteDance may be unwilling or unable to part with the algorithm, making a sale less attractive to potential buyers.
TikTok has dismissed the reports as “fiction”, though industry observers note that discussions about a sale could still be taking place behind closed doors.
Musk and the political landscape
Elon Musk has not commented directly on the rumours, though he reacted with a 'laugh' emoji on his social media platform X (formerly Twitter) in response to a post joking about the situation.
Musk, who maintains close ties with Chinese officials and US leaders, has emerged as a significant figure in the incoming Trump administration. He has been appointed to advise on reducing bureaucratic inefficiencies and has openly supported Trump’s policies.
Any acquisition of TikTok would require Musk to secure tens of billions of dollars, a formidable challenge even for one of the world’s wealthiest individuals.
User backlash and market shifts
The impending ban has sparked outrage among TikTok creators, many of whom depend on the platform for their livelihoods. Influencers have posted videos urging Congress to reverse the decision, arguing that other Chinese-owned apps have not faced similar scrutiny.
Meanwhile, a significant number of TikTok users appear to be migrating to rival apps, including Xiaohongshu, a Chinese platform known as 'Little Red Book'. The app has surged in popularity in the US, reaching the top of Apple’s download charts.
Outlook
The potential sale of TikTok to Musk or another US-based entrepreneur could offer a resolution to the escalating tensions between Beijing and Washington.
But numerous obstacles remain, from legal battles in US courts to ByteDance’s control over the platform’s critical technology.
As the January 19 deadline looms, the future of TikTok in the US hangs in the balance, with global implications for technology, trade and social media.