TikTok Sale Update: ByteDance Prefers Independent Spin-Off To Microsoft Buy

TikTok parent company ByteDance prefers spinning off the company independently rather than selling it to U.S. tech giant Microsoft, according to news reports.

President Donald Trump said Friday that he was considering a ban on the popular video-sharing app because of its Chinese ownership and reports have indicated that he will require ByteDance to divest the company in order for it to continue operating in the U.S.

Shortly after Trump’s considerations were reported, other reports emerged that Microsoft was in early talks to acquire TikTok. However, on Monday, the South China Morning Post reported that almost everyone on the ByteDance board would prefer a complete spin-off rather than a sale, citing a source close to the discussions.

“Except for Zhang Yiming [the founder of ByteDance], almost all those in the room favour such a spin-off,” the source said. “The mood is kind of: ‘The founder will be out and the house will be ours.’ But even for Zhang himself, there’s really no other option because the app will be killed if you don’t let it go.”

If this plan were to go through, the spun-off entity would be able to retain the name TikTok and continue to operate in many overseas markets. It would no longer report to ByteDance and have a new management structure.

TikTok has faced scrutiny in the U.S. and elsewhere over its perceived security threat. Despite the company denying these allegations, security reports have found that TikTok has given user data to the Chinese government.

Such a divestment would likely meet the requirements for continued operation in the U.S., but it remains to be seen if the move would allow TikTok’s ban to be lifted in India. The country banned numerous popular Chinese apps following a heated military clash in the Himalayas several weeks ago.

Microsoft may have paused its pursuit of the company after Trump stated that he opposed the potential acquisition, according to a Wall Street Journal. However, speaking to reporters on Monday, the president seemingly shifted his stance, stating that he would be in favor of the Microsoft deal as long as it was secure. This shift came after reports indicated that Republicans had pressured the President into supporting the move.

"I don’t mind whether it’s Microsoft or someone else, a big company, a secure company, a very American company buys it,” Trump said. “It’ll close down on Sept. 15 unless Microsoft or somebody else is able to buy it and work out a deal, an appropriate deal, so the Treasury of the United States gets a lot of money.”