Twitter has expressed interest in buying social media app TikTok’s US operations from its Chinese parent ByteDance, reports say.
Microsoft has been at the centre of a possible deal to buy TikTok’s US business, along with its operations in Australia, Canada and New Zealand.
TikTok has been generating controversy over security concerns – accusations of misuse of user data, censorship and of influence from the Chinese Communist Party.
- US Lawsuit Claims TikTok is Transferring ‘Vast Quantities’ of Data to China
- Federal Trade Commission Fines TikTok For Failing to Protect Underage Users
On August 6, US President Donald Trump gave companies 45 days to stop doing business with the company or finalise a deal to buy its US operations. TikTok has said it aims to challenge the order.
The Wall Street Journal has cast doubts on Twitter’s ability to afford the deal or complete it ahead of the 15 September deadline. ByteDance has been valued as the world’s largest startup, worth an estimated $78 billion. Its US operations are valued in the tens of billions of dollars.
With a market capitalisation of $29 billion (£22bn), Twitter is far smaller than Microsoft, which is valued at over $1.6 trillion. Twitter also held a reported $7.8 billion in cash and short-term investments in June against Microsoft’s reported $136 billion.
This means that Twitter would likely need help from outside investors in order to fund the deal.
However, as a smaller company, Twitter would not face the same level of antitrust scrutiny as larger companies. Furthermore, the company does not operate in China, reducing the risk of pressure from the Chinese government.
The move could muddy the waters with Microsoft’s deal, meaning it takes longer to strike and taking it outside the time limit. On the other hand, potential lawsuits against the deadline could also hold up either sale. Microsoft said that the company “will move quickly to pursue discussions with TikTok’s parent company, ByteDance, in a matter of weeks, and in any event completing these discussions no later than September 15, 2020″.
Trump has also put his support behind Microsoft buying TikTok’s US operations but has said that the US government should receive a “substantial portion” of the proceeds.
Twitter previously had a similar short-form video sharing platform, Vine. The company ended the app in December 2016 as part of a restructuring initiative to reduce costs.
With over 500 million users, TikTok has a larger audience than Twitter, which has more than 300 million. TikTok also has a larger share of younger users, with over 50% falling into the 10-19 and 20-29 demographics. Twitter’s largest demographic is the 25-34 group, with 30.9% of its users.
Facebook has also taken an interest in TikTok’s success, but instead of seeing to buy the company, has chosen instead to create a rival for the platform, Reels.