Under Pressure to Divest, TikTok’s Parent Company Approached Netflix for a Deal
The Chinese parent company of TikTok, under pressure to sell the app’s U.S. operations, approached streaming giant Netflix about a possible deal, but it now appears that Microsoft Corp. and a group led by Oracle Corp. are the leading bidders, according to a story in The Wall Street Journal. TikTok is a mobile video-creation and -sharing app with an estimated 100 million users in the U.S. It is especially popular among teenagers.
ByteDance Ltd., the Beijing-based owner of TikTok, had been in talks with Microsoft over the summer for a deal that could also include TikTok’s operations in Canada, Australia and New Zealand, the paper reported. The companies were close to an agreement in early August, but then President Trump expressed opposition, stating that he’d rather ban the app in the U.S. Trump then issued an executive order that effectively set a 45-day deadline for an American company to close a deal. On Aug. 14, Trump issued another executive order that gave ByteDance 90 days to divest TikTok’s U.S. operations.
The administration argues that personal information collected by the app could be shared with the Chinese government.
Microsoft remains in the hunt for TikTok, but Oracle has also been in preliminary talks as part of a group that includes General Atlantic and Sequoia Capital. The latter are U.S.-based investment firms that also have major stakes in ByteDance. President Trump has expressed public support for the Oracle bid.
Business Insider reported that TikTok’s U.S. operations could fetch $10 billion to $50 billion, limiting the number of tech companies with pockets deep enough to make an offer.
Netflix declined to enter negotiations after being approached by TikTok, The Journal reported. But CNBC.com technology reporter Alex Sherman opined that a deal would make a lot of sense for Netflix. It’s one of the few tech companies that could afford TikTok, he argued, and the acquisition would provide an alternative ad-driven revenue stream. And Netflix co-CEO Reed Hastings has cited TikTok as a competitor even though its videos are produced by users. It’s what Hastings describes as a “substitution threat” because it gives users an alternative way to spend their time.
A deal for TikTok is not a sure thing. The app developer has filed a federal lawsuit seeking to overturn the Aug. 6 executive order. “We strongly disagree with the Administration’s position that TikTok is a national security threat,” the company stated.