(NEW YORK) — Social media platform TikTok stands on the brink of a forced sale after the House passed a measure on Wednesday that would ban the app unless it parts ways with its Chinese-owned parent company ByteDance.
If ByteDance opts to sell, the move would set off a sprint to reach a deal worth up to hundreds of billions of dollars within the 180-day time limit set by the bill.
The popular and fast-growing platform makes for an attractive acquisition but buyers may face significant hurdles, including lingering doubts over the role of the Chinese government and challenges raising the necessary funds, experts told ABC News.
Some tech giants with deep pockets would likely forgo the acquisition over antitrust fears while smaller firms may lack the resources to afford TikTok, they added.
“The government wants China to divest U.S. TikTok operations that will cost a buyer a lot of money but the same government doesn’t want tech companies and media companies to get bigger and more powerful,” Erik Gordon, a business professor at Michigan University who studies mergers and acquisitions, told ABC News. “Those two priorities are contradictory.”
In response to ABC News’ request for comment, TikTok said the bill aims to ban the company from the U.S.
“This is a ban bill — full stop. Members of Congress know that and some of the bill’s biggest cheerleaders have publicly said this is a ban bill. And they’ve always made clear that their actual intention is banning TikTok in the United States,” a TikTok spokesperson said.
The social media platform has faced growing scrutiny from some government officials over fears that user data could fall into the possession of the Chinese government and the app could be weaponized by China to spread misinformation.
There is little evidence that TikTok has shared U.S. user data with the Chinese government or that the Chinese government has asked the app to do so, cybersecurity experts previously told ABC News.
It’s not yet clear if there would be the groundswell of support needed to get 60 votes for the legislation to advance in the Senate. President Joe Biden has vowed to sign the measure into law if it reaches his desk.
In theory, the biggest players for a TikTok acquisition would be Meta, the owner of Instagram, or YouTube-parent Google. However, the two leading firms in digital advertising and short-form video would invite strong antitrust opposition, leaving slim prospects for either company, experts told ABC News.
“Getting acquired by Google and Meta is an absolute no-go,” Florian Ederer, a professor of markets, public policy and law at Boston University, told ABC News. “It would make the Department of Justice antitrust division aghast.”
Experts differed over the prospects for the remaining tech giants, such as Apple and Amazon. The two firms — each of which exceeds $1.8 trillion in value — risk antitrust opposition but may face less scrutiny since neither one operates a social media business comparable to Instagram or YouTube, some experts said.
Amazon, which has sought to grow its footprint in digital advertising, could view TikTok as a potential target, David King, a professor of management at Florida State University, told ABC News.
“There could be synergies with TikTok and its growing advertising business,” King said.
In 2020, then-President Donald Trump negotiated an agreement over national security concerns that would have seen a major stake in TikTok shared between Walmart and Oracle. But the sides failed to complete a deal.
At the time, Microsoft also fell short in an attempt to acquire TikTok. Microsoft, currently the most valuable company in the world, may try again but would likely seek to avoid the uncertainty of pushback from China and antitrust backlash from the U.S., Brian Wieser, founder of the consulting firm Madison and Wall, told ABC News.
“Take Microsoft, do they have the capital to theoretically do it? Sure,” Wieser said. “Would they take on that risk? Would their shareholders support it? Could they get the Chinese government’s support?”
“You can’t rule it out,” Wieser added.
Several experts who spoke to ABC News raised the possibility of an acquisition by X, formerly known as Twitter, since the platform could potentially avoid major antitrust backlash while benefiting from the considerable funds of owner Elon Musk. Though the frequent headlines and advertising exodus at X may scare off investors, they added.
“I’m not sure who would provide Musk with funding after what happened at Twitter,” Charles Whitehead, a professor of business law at Cornell University who focuses on corporate mergers, told ABC News.
The absence of a clear-cut favorite among the top tech firms leaves the field open for a relatively small or unknown firm, or an institutional investor like private equity, some experts said.
The front-and-center role of politics in a potential forced sale adds a significant degree of uncertainty, Gordon said.
“Dealmaking is fairly easy to predict but politics are difficult to predict,” Gordon added. “This would be a deal driven entirely by politics, so who knows what will happen?”
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