Chinese officials are exploring the possibility of Elon Musk taking over the U.S. operations of TikTok if the app is unable to successfully counter a looming ban, sources privy to the discussions have revealed.
The Chinese government has a firm preference for TikTok to remain under the ownership of its parent company, ByteDance Ltd. The company is actively appealing the anticipated ban in the U.S. Supreme Court, where justices indicated on January 10 that they might uphold the legislation. Senior officials in China have begun discussing alternative plans for TikTok amidst broader deliberations on how to engage with the incoming Trump administration, one of which includes Musk, according to individuals who requested anonymity due to the confidential nature of the talks.
A partnership with Musk, who is closely affiliated with Trump, is seen by the Chinese government as a favorable arrangement. Musk, who invested over $250 million in support of Trump’s re-election efforts, is expected to play a key role in enhancing government efficiency after the Republican administration takes office.
One of the scenarios being considered involves Musk’s platform, X (formerly known as Twitter), taking over TikTok’s U.S. operations and integrating the two businesses. With TikTok boasting over 170 million users in the United States, this move could enhance X’s appeal to advertisers. Additionally, Musk’s artificial intelligence initiative, xAI, could potentially leverage the vast data generated by TikTok.
Chinese officials have not yet reached a definitive agreement on how to move forward, and their discussions are in the early stages, sources shared. It remains unclear how much ByteDance is aware of these deliberations, as well as whether TikTok and Musk have engaged in any talks concerning the potential acquisition.
Musk and his team have not responded to requests for comment on the matter. Earlier this year, Musk expressed his belief that TikTok should remain accessible in the U.S., emphasizing that banning it would contradict principles of free speech and expression in America.
Representatives from ByteDance and TikTok also did not reply to inquiries related to this issue. Similarly, the Cyberspace Administration of China and the Ministry of Commerce, two government bodies that may influence TikTok’s future, did not provide comments.
The discussions in Beijing indicate that the fate of TikTok may extend beyond the control of ByteDance alone. Chinese officials recognize the likely confrontations with the Trump administration regarding tariffs and export controls, viewing the TikTok negotiations as an opportunity for dialogue and potential reconciliation.
The Chinese government possesses a “golden share” in a ByteDance affiliate that grants it a degree of influence over the company’s strategic decisions. ByteDance maintains that this control is limited to its subsidiary operating in China and does not extend to its global operations. However, China’s export restrictions prevent local companies from selling their software algorithms, a crucial aspect of TikTok’s functionality. Thus, any potential sale involving TikTok’s recommendation technology would require approval from the Chinese government.
Analysts from Bloomberg Intelligence have estimated the value of TikTok’s U.S. operations to be between $40 billion and $50 billion. This figure presents a substantial challenge for Musk, even given his status as the world’s wealthiest individual. It remains uncertain how Musk could finance such a transaction, especially considering he is still managing significant loans from his acquisition of Twitter, which cost him $44 billion.
Musk reportedly enjoys a positive reputation among many ByteDance employees, viewed as a successful entrepreneur with significant experience interacting with the Chinese government through Tesla.
ByteDance executives have consistently stated their goal is to contest U.S. legislation that would force the sale or closure of TikTok’s U.S. operations, citing national security concerns. TikTok’s legal team has claimed that the legislation infringes upon First Amendment rights pertaining to free speech.
Although a majority of the Supreme Court justices hinted that national security concerns may take precedence over free speech rights, a formal ruling has not yet been issued. As the new administration prepares to take office on January 20, Trump has sought to delay the TikTok ban, which is set to go into effect on January 19, to allow for negotiations, expressing a desire to “save” the app.
However, separating TikTok’s U.S. business presents significant complexities that could affect stakeholders both in China and the United States. TikTok’s legal representatives argued before the Supreme Court that divesting the U.S. segment would be “extraordinarily difficult.”
It remains to be seen whether the U.S. TikTok operations will be sold through a competitive bidding process or through governmental arrangements. Notable figures, including billionaire Frank McCourt and investor Kevin O’Leary, have shown interest in acquiring TikTok through Project Liberty, which O’Leary indicated he has discussed with Trump. Moreover, Microsoft had previously sought to purchase the platform, and Oracle has established a significant technology partnership with TikTok.
Alternatively, TikTok could consider transitioning its existing U.S. customer base to a different app under a new brand to potentially evade the ban, though the efficacy of such a strategy is uncertain.
One individual closely associated with TikTok mentioned that maintaining the legal battle remains a top priority for executives, who would prefer to continue fighting in the U.S. rather than relinquishing control through a sale.
Musk’s unique position allows him to play a role in shaping the dynamics of China-U.S. relations, particularly due to his extensive business interests in both countries. His company Tesla has established a considerable manufacturing presence in China, significantly contributing to its market share despite local competition and fostering goodwill among Chinese officials.
While Trump is appointing individuals with tough stances on China, Musk has voiced opposition to certain trade policies, including tariffs imposed on Chinese electric vehicles during the Biden administration.
