America wants to buy TikTok, Joe Biden immediately calls Xi Jinping

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Editorial, CNBC Indonesia

Tech

Wednesday, 03/04/2024 09:15 IWST

Photo: President of the United States, Joe Biden and President of China, Xi Jinping. (X/SpokespersonCHN)

Jakarta, CNBC Indonesia – President Joe Biden on Tuesday (2/4/2024) spoke with Chinese President Xi Jinping by telephone. Apparently, one of the hot topics raised by Biden was TikTok.

According to reports , In a conversation with Xi Jinping, Biden stated that the United States had suspicions about TikTok’s ownership.

The discussion about TikTok between Biden and Xi Jinping could be a continuation of the steps taken by US representatives in the House of Representatives to pass a bill regarding the short video application.

The bill contains pressure on ByteDance to release ownership of TikTok to non-Chinese entities. ByteDance was given 6 months to sell its TikTok business in the US. If the congressional order is not complied with, the TikTok app will be blocked in the US.

The people’s representatives argued that forcing the sale of TikTok must be taken for the sake of national security. This bill must also be approved by US senators before Biden signs it into law.

The price of TikTok is thousands of trillions of rupiah

According to estimates by a financial analyst, TikTok may be sold for more than US$ 100 billion (Rp. 1,574 trillion).

This figure is low, because TikTok generated sales of US$ 16 billion (Rp. 251 trillion) in the US last year. The Financial Times reported that the revenue figure should value the company at up to $150 billion.

The price will be met by only a few buyers and sets a new milestone for the acquisition of giant technology companies. But a purchase by a rival tech giant would likely face intense antitrust scrutiny in the United States and countries around the world that would slow the process, or even halt it.

“The list of bidders here is very small,” said David Locala, former head of global technology mergers and acquisitions at Citi, the American multinational investment bank.

“US regulators may have to take action, do they want US ownership of TikTok, or do they want one or more of the big tech companies to get bigger?,” he explained further.

With a purchase price of US$ 100 billion, TikTok would be one of the largest merger and acquisition deals in history with complexity and time constraints.

For example, AOL’s merger with Time Warner in 2000 worth US$ 182 billion (Rp. 2,864 trillion) alone took about a year to complete.

Additionally, Elon Musk’s purchase of Twitter for US$ 44 billion (Rp. 692 trillion) in 2022 took about six months to complete – and the sale was fully supported by Twitter’s board of commissioners.

However, seeing the potential of TikTok, many parties are ready to acquire this popular application.

Former Treasury Secretary Steven Mnuchin told CNBC last week that he was putting together a group of investors willing to buy TikTok.

Meanwhile Bobby Kotick, the former head of video game giant Activision Blizzard, and Kevin O’Leary, a Canadian investor from the TV show “Shark Tank,” have both expressed interest in a TikTok deal. But they may not have the money to undertake a serious takeover, and pooling their funds as part of an investment consortium would create yet another problem.

“With consortia, you never know whether someone is really involved or not until it’s over,” Locala said. “The more parties you introduce, the harder it is to make progress.” he explained.

(to/the)