Chinese officials are exploring a scenario in which Elon Musk would acquire the US operations for TikTok, if the short video app fails to overcome an looming ban on the United States.
Bloomberg reported that while Beijing would prefer TikTok remain owned by its parent company ByteDance Ltd. they are also discussing contingency plans in case of a possible loss at the US Supreme Court.
Beijing holds strategic discussions amid US legal battles
The US Supreme Court has indicated that it is likely to uphold this law.
Bloomberg reports that senior Chinese officials are already discussing contingency plans to deal with TikTok, as part of a larger discussion on how to navigate relations with the new Trump administration.
Musk could be involved in these confidential discussions.
Musk’s connections to Trump could facilitate a possible deal
A high-profile agreement with a key ally to President-elect Trump could be appealing for the Chinese government. It is expected that it will have a say in any possible sale of TikTok.
Musk, who has contributed over $250 million to Trump’s reelection campaign, has been selected for a prominent position in improving government efficiency once the Republican assumes office.
According to reports, the Chinese government sees TikTok as a potential area for reconciliation with a new US administration.
X and TikTok – a merger that could increase user engagement
One scenario being considered by China is that Musk’s X, formerly Twitter, would take control of TikTok US operations and run the two businesses together.
Musk’s AI firm, xAI could benefit from TikTok data sets, if they combine X and TikTok US. TikTok has over 170 millions users in the US.
Sources say that while these discussions are taking place in Beijing, no firm consensus has yet been reached on how to proceed.
The discussions are still preliminary. It is unclear whether TikTok has had any discussions with Musk, or how much ByteDance actually knows about the government’s deliberations. Musk, ByteDance representatives and TikTok representatives have not responded to requests made for comment.
Musk said on X that he believed TikTok should be available in the US as banning it “would be contrary to freedom of expression and speech”.
China’s influence on TikTok and its future
These talks in Beijing suggest the fate of TikTok may no longer be in the hands of ByteDance, and that China expects to have tough negotiations with Trump’s administration on a variety issues.
They see the TikTok talks as an opportunity to mend ties with the US administration.
The Chinese government holds a “golden stake” in an affiliate of ByteDance, allowing them to influence its strategy and operations. They also have to approve any sale that includes a valuable recommendation engine.
China’s export regulations prevent its companies from selling software such as the algorithm that is integral to TikTok.
Bloomberg Intelligence analysts estimate that the US operations of TikTok are worth between $40 billion and 50 billion dollars, which is an impressive sum for even the richest person in the world.
It’s unclear how Musk would fund such a deal, if it involved selling other holdings or if the US government would approve the deal.
It would also be a complex operation to spin off TikTok’s US business.
Lawyers for TikTok had previously claimed that separating the US component of the app would “extraordinarily be difficult.”
It is also unclear whether a sale of US TikTok will be made through a competitive process, or if it will be arranged by the government directly.
Billionaire Frank McCourt, “Shark Tank’ investor Kevin O’Leary and others are also said to be part of the bid through Project Liberty for TikTok and have spoken with Trump about this deal. Microsoft Corp. as well as Oracle Corp. both expressed interest in the acquisition of the company.
One option for TikTok is to move existing US customers over to a similar app with a different branding. This could potentially circumvent this ban, but the viability of the strategy remains uncertain.
A person close to the company has told Bloomberg that, before the Supreme Court hearings, the legal battle was their primary focus and that they preferred to continue fighting to maintain control rather than sell TikTok’s US operations.
Musk’s role in US-China relations
Musk is in a unique position to influence the China-US relations as the richest person on the planet, with business interests spanning the world’s largest economies.
Tesla’s factory in Shanghai has built goodwill with Chinese officials and helped it grow its market share in China.
Musk has spoken against Trump’s trade policies, which include tariffs on Chinese EVs, despite the fact that Trump has filled his administration with China-hawks such as Secretary of state nominee Marco Rubio.
This post China mulls TikTok US sales to Elon Musk, as a possible solution, may be modified based on new developments.
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