Update (1600ET): And just like that, minutes after the close, another 'TikTok' headline has hit the tape...
- TIKTOK INTENDS TO BRING PROPOSAL TO WH BY SEPT. 20, PERSON SAYS
...and just like that - problem solved.
Well, at least until the next headline hits...
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Beijing has just upped the ante in its latest game of tit-for-tat brinksmanship with Washington over the fate of TikTok's US business.
President Trump yesterday insisted that ByteDance must agree to sell TikTok's US business (potentially along with its business in a handful of other anglophone countries) before his previously-stated deadline of Sept. 15, or his administration would find a way to shut it down.
With US courts apparently unwilling to intervene - at least, thus far - Beijing is insisting that it would rather see Trump shutter the business - and presumably risk the political backlash domestically - than simply cave to Washington and Trump.
- EXCLUSIVE-CHINA OPPOSES A FORCED SALE OF TIKTOK'S U.S. BUSINESS BY BYTEDANCE, WOULD RATHER SEE IT SHUT, SOURCES SAY
Shares of the leading TikTok suitors, a group that, bizarrely, includes Wal-Mart and Microsoft (in a widely remarked-upon bric-and-clicks alliance), declined on the news.
Microsoft shares also dropped, adding to the woes of the major tech giants.
This level of rancor from Beijing is unprecedented for this issue, but Chinese state media has issued threats about Beijing's unwillingness to tolerate a "smash and grab" deal.
After President Trump said Thursday that the deadline for the sale of the app wouldn't budge (though during the briefing, Trump cited Sept. 15 as the deadline, even though the official deadline in the last EO was later in the month), Reuters published a guide to the talks.
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Trump first told reporters on July 31 that he planned to ban TikTok in the United States within 24 hours.
But on Aug. 3, after Microsoft revealed it was in talks to buy parts of TikTok, he said he would give ByteDance 45 days to sell to a U.S. buyer. Then, on Aug. 6, Trump issued the executive order banning transactions with ByteDance and its affiliates in 45 days, effectively a Sept. 20 deadline.
WHO HAS TO APPROVE A DEAL?
ByteDance and the potential TikTok buyers have to come up with a deal acceptable to the U.S. Committee on Foreign Investment in the United States (CFIUS), an inter-agency group.
The Trump administration does not want ByteDance to have any continued interest in TikTok, and for a tech company to be the lead investor in the short video app.
China’s commerce ministry joined the party on Aug. 28 with a revised tech export control list that experts said would give it regulatory oversight over any TikTok deal.
This means Beijing’s sign-off is likely to be needed too, something many observers doubt will happen immediately. The rules say that it can take up to 30 days to obtain preliminary approval to export the technology.
Last week, when asked about how the rules could impact the TikTok deal, the Chinese commerce ministry said the regulatory changes are not targeted at specific companies, but reaffirmed their right to enforce the rules.
IF NO DEAL BY SEPT. 20?
If the deadline is not extended, then transactions with TikTok would be banned, although exactly which ones has not been specified.
Reuters has reported the executive order could make advertising on the platform illegal and TikTok has been preparing advertisers for such an outcome.
The U.S. is likely to ban TikTok from being downloaded from app stores, Reuters has also reported.
However, it is unclear whether there are transactions that can be prohibited that will prevent existing users who have already downloaded.
TikTok from using it.
When confronted with a ban in India, TikTok chose to shut down voluntarily.
DOES TIKTOK HAVE ANY OTHER OPTIONS?
TikTok and ByteDance filed a lawsuit in Los Angeles federal court on Aug. 24 against Trump’s executive order, calling it a pretext to fuel anti-China rhetoric.
TRUMP’S SECOND ORDER
On Aug. 14, the Trump administration issued another executive order that required ByteDance to divest its interest in video-sharing app TikTok’s operations in the United States within 90 days. This suggests a deadline of Nov. 12.
The second order did not say what might happen if ByteDance failed to comply.
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