Elon Musk dismisses TikTok acquisition amid Trump speculation
Elon Musk claims that he does not plan to purchase the TikTok app from the Chinese company ByteDance, thus denying earlier reports by Donald Trump, who had suggested he was open to such an operation involving the billionaire from the close circle of the President of the United States.
Elon Musk is not interested in purchasing the TikTok app, owned by the Chinese company ByteDance. The world's richest man, CEO of SpaceX and Tesla, said this on January 28th at the 16th Welt Economic Summit, organized in Berlin by the media conglomerate Axel Springer. The video from this event, where Musk participated remotely via a video link, was published online on Saturday, February 9th.
"I have not put in a bid for TikTok. I don't have any plans for what I would do if I had TikTok," Musk stated in a video recording published by The WELT Group, owned by the German media company Axel Springer.
Musk added that he personally does not use the short film creation app and does not know the format of the Chinese app. "I'm not chomping at the bit to acquire TikTok, I do not acquire companies in general, it's quite rare," summarized the billionaire from the close circle of President of the United States, Donald Trump.
Interestingly, a week ago, Trump communicated that he was open to acquiring the app owned by the Beijing-based ByteDance through Musk. Like most tech companies in China, it is subject to the control of the Communist Party of China, which raises concerns among Western governments about the influence on public debate and implications for national security. In the United States, the app has approximately 170 million users.
In mid-January, Bloomberg reported that Chinese authorities are holding preliminary talks about selling TikTok to Elon Musk. According to Bloomberg, TikTok could be sold through a tender or an agreement with the U.S. government. The article's authors suggest this may indicate that the future of the app is not solely in the hands of its parent company ByteDance. As noted, the Chinese government holds a so-called golden share, which gives it influence over the company's strategic decisions.
U.S.-China standoff over TikTok
Concerns about the security of TikTok users' data stem from the fact that Chinese law requires companies to cooperate with the government regarding national security. Therefore, there is a risk that TikTok user data may be shared with the Chinese government.
Moreover, China could use TikTok's algorithm (an advanced recommendation system that determines what video content is displayed to users, aiming to deliver the most engaging and personalized content tailored to the individual's tastes) for propaganda and disinformation purposes, which poses a risk to security and destabilization.
TikTok ban in the U.S. postponed
Amid these concerns, last April, Congress passed a law banning the distribution and update of the app in the U.S. market, unless TikTok remains controlled by a Chinese entity. Otherwise, the app will be shut down in the U.S. The Chinese owner of the app established companies in the U.S., preparing for a potential sale of these American assets to Americans. At the same time, they challenged unfavourable regulations, arguing it limits the freedom of speech of about 170 million American users, but to no avail.
Following a court verdict on January 19th, TikTok shut down its app in the U.S. However, after a few hours, ByteDance restored the app's operation. The company did so after Donald Trump, before his inauguration as U.S. President, which took place on January 20th, suspended the enactment of the said law for 90 days.
This gave TikTok more time to find a non-Chinese buyer, a condition included in the law signed by former President Joe Biden in April last year.
Confusion over TikTok sale
ByteDance reported that they do not plan to sell shares, although some investors have publicly expressed interest. According to CNN Business, influencer MrBeast, whose real name is Jimmy Donaldson, posted in January that he intends to buy the TikTok app. Also, "Shark Tank" star Kevin O'Leary and former Los Angeles Dodgers owner Frank McCourt have expressed interest in purchasing the Chinese app.
Musk is considered a potential bidder, though.
In 2022, Musk finalized a $44 (CAD 63) billion deal to take over Twitter, which he renamed X. He stated that acquiring Twitter was due to its "importance in preserving freedom of speech in America."
According to Dan Ives, an analyst at the financial firm Wedbush Securities, the value of TikTok's U.S. assets alone - excluding the algorithm that manages content distribution - is estimated at $40 - $50 (CAD 57 - CAD 71.5) billion. The issue is that a significant portion of the app's value may lie in the algorithm itself, which is in Chinese hands, complicating the valuation of the app in dollar terms.
The first step for any buyer would be to examine TikTok's algorithm. Musk said that if he looked at the algorithm, he would decide "how harmful or useful is this algorithm."
Tesla and SpaceX did not respond to CNN's request for comment regarding the potential TikTok acquisition.
