Chinese officials are reportedly exploring a scenario where Elon Musk could acquire the US operations of TikTok if the short-video app fails to overcome a looming ban in the United States.
While Beijing’s preferred outcome is for TikTok to remain under the ownership of its parent company, ByteDance Ltd., contingency plans are being discussed in anticipation of a potential loss at the US Supreme Court, according to a report in Bloomberg.
Strategic discussions in Beijing amid US legal battles
Although ByteDance is contesting the impending ban with an appeal to the US Supreme Court, the justices signaled during recent arguments that they are likely to uphold the law.
According to Bloomberg, senior Chinese officials have already begun debating contingency plans for TikTok as part of a broader discussion about navigating relations with the incoming Trump administration.
These confidential discussions include the possibility of Musk becoming involved.
Musk’s ties to Trump could facilitate a deal
A high-profile deal with a key ally of President-elect Trump may hold appeal for the Chinese government, which is expected to have a voice in any potential sale of TikTok.
Musk, who has provided over $250 million in support of Trump’s reelection, has been tapped for a prominent role in improving government efficiency after the Republican takes office.
The Chinese government reportedly sees TikTok negotiations as a possible area for reconciliation with the new US administration.
X and TikTok: a potential merger for increased user engagement
One of the scenarios being considered by the Chinese government involves Musk’s X (formerly Twitter) taking control of TikTok’s US operations, potentially running the two businesses together.
The combination of X and TikTok US, with its over 170 million users in the US, could significantly bolster X’s efforts to attract advertisers, as well as possibly benefiting Musk’s AI company, xAI, with access to TikTok’s vast data sets.
While these discussions are underway in Beijing, sources say that no firm consensus has been reached about how to proceed.
The discussions are still considered preliminary and it is also unclear how much ByteDance knows about these government deliberations, or whether TikTok and Musk have had any talks. Both Musk and representatives from ByteDance and TikTok have not responded to requests for comment.
Musk did note on X in April that he believes TikTok should remain available in the US, as banning it would be “contrary to freedom of speech and expression”.
China’s influence and TikTok’s future
These talks in Beijing suggest that TikTok’s fate may no longer be solely in ByteDance’s control, and that the Chinese government expects to face tough negotiations with the Trump administration over a range of issues.
They view the TikTok negotiations as a potential opportunity for mending ties with the new US administration.
The Chinese government also holds a “golden share” in a ByteDance affiliate, which allows them to influence the company’s strategy and operations, while also needing to approve of any sale that includes the valuable recommendation engine.
This is because China’s export rules prevent its companies from selling software algorithms like the one integral to TikTok.
Bloomberg Intelligence analysts estimate the US operations of TikTok could be valued at between $40 billion and $50 billion, which is a considerable sum even for the world’s richest person.
It’s also unclear how Musk would finance such a transaction, if it would involve selling other holdings, or whether the US government would approve of the deal.
Furthermore, spinning off TikTok’s US business would be an extremely complex operation.
Lawyers for TikTok have previously argued that separating the US components of the app would be “extraordinarily difficult.”
Whether a sale of US TikTok would happen through a competitive process or be arranged directly by the government is also uncertain.
Billionaire Frank McCourt and “Shark Tank” investor Kevin O’Leary are also reportedly part of a bid through Project Liberty to acquire TikTok, and have spoken about the deal with Trump. In the past, both Microsoft Corp. and Oracle Corp. have also shown an interest in acquiring the company.
One alternative for TikTok would be to transition existing US customers to a similar app (with different branding), which could potentially circumvent the ban, although the viability of this strategy remains uncertain.
Meanwhile, a person close to the company told Bloomberg, that before the Supreme Court hearing, their legal battle was the primary focus of top executives, and that they would prefer to keep fighting to maintain control, rather than sell TikTok’s US operations.
Musk’s potential role in US-China relations
Musk is uniquely positioned to influence the China-US relationship as the world’s wealthiest person, with business interests that span the world’s two largest economies.
His Tesla factory in Shanghai has established goodwill with Chinese government officials and has helped to grow its market share in China.
Although Trump is filling his administration with China hawks, such as Secretary of State nominee Marco Rubio, Musk has spoken out against some of the trade policies, including tariffs on Chinese EVs.
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