As Trump searches for an American TikTok buyer, 5 details could really complicate the sale

THE Potential sale of TikTok to an American buyer has become one of the most complex and highest trade bids in recent memory, with high-profile contenders like Elon Musk, Oracle Chairman Larry Ellison, Creator Star MRBEATTech CEOs and others related to potential sale.

At the heart of the matter are competing geopolitical interests, regulatory hurdles, and Tiktok’s intrinsic value as a cultural and technological powerhouse.

Here are the key challenges to executing this sale successfully, according to interviews with media executives and investors.

Ownership and leadership structure

One of the most immediate challenges is determining how ownership and leadership would be structured if a U.S. company acquired TikTok.

A 50/50 joint venture, which has been floated as a potential solution, brings inherent governance complexities, according to Oaklins DeSilva + Phillips partner Jay Kirsch. For a company of TikTok’s scale and rapid growth, centralized decision-making is crucial.

Shared responsibilities between us and Bytedance executives could lead to inefficiencies in areas such as content moderation, data governance and security protocols.

The deal is also expected to satisfy the Commission on Foreign Investment in the United States (CFIUS) and other regulators to ensure that Biden does not retain residual control that could pose national security risks.

According to the general manager of Willis Ritchie.

Equity and Investor Exit Strategy

Negotiating the role of investors, particularly those with significant ties to China, is another key challenge.

American investors like Sequoia and General Atlantic, who already own stakes in ByTedance, can push for a bigger role in TikTok’s future, according to Savage Ventures founder Sam Savage.

However, determining which investors back out and which retain stakes could lead to litigation, especially if Chinese-linked investors resist giving up their influence.

Valuing Tiktok with precision is no easy feat. The platform’s meteoric growth and reliance on a proprietary algorithm, which byedance may refuse to transfer, makes it difficult to achieve consensus on its value. Tiktok’s valuation has been estimated at $200 billion, making any deal involving partial ownership an astronomical investment.

Political and commercial implications

The sale of TikTok is deeply politicized, with figures like Donald Trump and Elon Musk potentially influencing the results.

Trump’s involvement in particular could alienate Tiktok’s predominantly user base, leading to brand erosion, according to Savage. Advertisers, wary of controversy, could cut spending on the platform if it becomes a political lightning rod.

Internationally, an aggressively enforced sell-off by the United States could provoke new actions against American companies operating abroad, sources said. Such a move could set a dangerous precedent, escalating global tensions around cross-border technology operations.

Algorithm ownership and licensing

Tiktok’s algorithm, the recommendation engine driving its immense popularity, is its most valuable asset.

Bytedance’s reluctance to include the algorithm in a potential sale complicates matters considerably. Without it, the value of Tiktok could fall, according to Kirsch.

A potential workaround could involve licensing the algorithm, but this would create continued dependencies on byedance, raising further concerns around national security and operational autonomy. Alternatively, building a new algorithm from scratch would be a costly and time-consuming endeavor, likely degrading the user experience.

Transitioning TikTok’s US operations from ByTedance’s shared infrastructure would also be a technical and logistical nightmare, fraught with security risks and enormous costs.

Broader geopolitical considerations

China’s reaction to the sale could prove to be a significant roadblock.

Chinese regulators have previously designated key technologies as essential to national security, requiring approval for exports. If Beijing views the sale as a threat to its technological ambitions, it could block or hinder the transaction, according to Savage.

Additionally, Tiktok’s global footprint adds another layer of complexity. Decisions made about its U.S. operations could stop in markets where Tiktok faces increased scrutiny, such as Europe and India, potentially affecting its ability to operate in those regions.