Open Editor's Digest for free
Rula Khalaf, editor of the Financial Times, picks her favorite stories in this weekly newsletter.
Chinese officials are in discussions to potentially include Elon Musk in a deal over TikTok's US operations, days before the Chinese-owned social media app faces a ban from Washington, according to two people familiar with the discussions.
TikTok is set to shut down in the United States next Sunday under a bill passed by Congress in April, requiring Beijing-based parent ByteDance to sell its stake in the app or face a ban over security concerns.
According to people familiar with the official discussions, the plans may not be as straightforward as seeking to sell TikTok to Musk, the billionaire owner of social media app X and a close confidant of US President-elect Donald Trump. However, they hope that Musk will help come up with a solution that might prevent the platform from being forced to shut down.
Discussions are “very preliminary and mostly brainstorming” at this stage, according to one of them. The ByteDance and TikTok teams remain focused on winning the legal battle with the US government, the people added.
Bloomberg reported earlier on Tuesday that Chinese officials are considering selling TikTok to Musk. In response, TikTok said: “We cannot be expected to comment on pure fiction.”
The law to withdraw or ban TikTok goes into effect on Sunday, the day before Trump's inauguration. The US Supreme Court has indicated it is likely to allow the legislation. Both Trump and Musk have previously suggested that TikTok should be preserved in the United States.
Musk has a good relationship with Chinese officials, which puts him in an influential position to arbitrate deals like TikTok's divestment. The Tesla CEO has been regularly doing business in China for several years across his business empire, with regular interactions with government officials at various levels.
Last April, the billionaire flew to Beijing and met with Li Qiang, President Xi Jinping's second-in-command, which experts say is a sign of Beijing's approval of Musk and his technology plans.
Furthermore, Musk has a strong economic interest in maintaining a friendly relationship with China, as Tesla's share of Chinese electric vehicle sales has declined significantly over the past year. Tesla debuted a major update to its Model Y in China earlier this month for the first time.
Musk also owns artificial intelligence startup x.AI, whose technology is trained on X users' posts and will leverage access to large troves of TikTok data.
The TikTok application has achieved great popularity among teenagers, and its number of users now reaches 170 million users in the United States. It has been in the crosshairs of Washington officials over concerns that Beijing might use the app for espionage purposes or to spread propaganda.
During hearings at the US Supreme Court last week, TikTok denied the accusations and claimed that the law violates First Amendment protections for free speech.
Trump promised to “save the application” and implored the court to postpone the legislative deadline to allow him “the opportunity to pursue a political resolution of the issues in the case” when he returns to the White House later this month.
“In my opinion, TikTok should not be banned in the US, although such a ban might benefit the X platform,” Musk posted on X in April. “To do so would be contrary to freedom of speech and expression.” . This is not what America stands for.”
TikTok argued that a spin-off would be “technically not possible” before the deadline. Beijing, which would have a say in any divestment under China's export laws, said it opposed the sale and called the law a “blatant act of commercial theft.”
Noel Francisco of Jones Day, TikTok's lawyer, said on Friday that the divestiture process would be “extremely difficult under any time frame.” When asked what would happen on January 19 if the company lost the case, he replied: “As I understand it, we will still be in the dark.”
Musk did not immediately respond to a request for comment from the Financial Times. The Cyberspace Administration of China and the Chinese Ministry of Commerce did not respond to calls made outside business hours.
Additional reporting by Hannah Murphy in San Francisco and Stefania Palma in Washington, D.C
