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ByteDance denies rumors of selling TikTok stake to address US pressure

ByteDance’s advisors are said to be pitching a range of options to protect the value of the business.

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ByteDance, the Chinese owner of TikTok, has denied that it is considering selling a majority stake in its business as one of a range of options to deal with mounting pressure from the US over national security and privacy concerns.

The company’s advisors are pitching everything from an aggressive legal defence and operational separation for TikTok to sale of a majority stake to protect the value of the business, Bloomberg reported on Tuesday, citing people familiar with the matter who said that these talks were preliminary and no formal decision has been made.

The company would prefer to maintain full control of the business if possible, given its soaring popularity and profit potential, and the most likely sale scenario would be for it to sell a majority stake to financial investors, according to one of the sources quoted.

However, in response to queries from the Post, a ByteDance spokeswoman said there have been no discussions about any partial or full sale of TikTok. “These rumors are completely meritless,” she stated.

The popular video-sharing app has been coming under increasing scrutiny from lawmakers and regulators recently. Last month, Washington launched a national security review of ByteDance’s USD 1 billion acquisition of US social media app Musical.ly, which was later absorbed into the TikTok app.

The US Army also banned the app from government-issued mobile devices this week, saying it represented a cybersecurity threat and that users of government-issued mobile devices that had TikTok on them would be blocked from the Navy Marine Corps Intranet.

On Tuesday, The Wall Street Journal also reported that ByteDance was looking to set up global headquarters for the trending video-sharing app outside China.

Potential locations include Singapore, London, and Dublin, with no American cities on the list, according to the report, quoting people familiar with the company who said that the move of its headquarters has been discussed internally for months. The effort is “only accelerating because of the things happening in the US,” the Journal‘s sources said.

The app does not have an official headquarters as it operates through local teams in different regions. All of the operating teams report to a team in Shanghai, China, according to people familiar with the matter.

“We have been very clear that the best way to compete in markets around the globe is to empower local teams,” a TikTok spokeswoman said, without commenting on whether the app was seeking headquarters overseas. “TikTok has steadily built out its management in the countries where it operates.”

Last month, the Post also reported that TikTok was looking for risk analyst professionals in Silicon Valley and other regions, including Mountain View, Singapore, and Dublin, to monitor public sentiment and analyze local regulations amid US pressure. These were new positions as the risk analysis team was previously fully based in Beijing, sources close to the matter had told the Post.

TikTok has defended itself against the allegations from the US, repeatedly emphasizing its independence from China and saying that it stores US user data locally with backup redundancy in Singapore. Alex Zhu, who heads TikTok and reports directly to ByteDance CEO Zhang Yiming, told The New York Times last month that he would turn Chinese president Xi Jinping down if the latter asked him to remove a video from the platform or hand over user data.

Since its launch in 2017, TikTok has become a global hit, a first for a Chinese-owned app. It was the seventh-most downloaded app of the 2010s, surpassing YouTube and Twitter, according to a recent report by App Annie.

The app, which is known as Douyin in China, was installed 67 million times in November, according to a Sensor Tower report. Its most popular markets include India, Brazil, and the US, which accounted for 43%, 8%, and 6.4% of total installations last month respectively, according to the same report.

This article first appeared on the South China Morning Post.