Twitter has reportedly reached out to TikTok to show an interest in purchasing its US operations.
In recent weeks, TikTok’s video-sharing website has been at the forefront of heated controversy and acquisition topics.
Last week, US President Donald Trump instructed businesses to avoid doing business with TikTok amid security issues within 45 days.
Microsoft’s software company is the front runner to buy TikTok, but Twitter has now appeared as a possible suitor.
Did Twitter make a surprising decision?
The news is shocking, considering that Twitter has even less financial resources than Microsoft. If it wanted to make an offer for TikTok, the social media platform would almost definitely require support from other creditors. Microsoft intends to purchase assets of TikTok in US and its activities in Australia, Canada, and New Zealand.
Pursuing TikTok on video-sharing devices is something of an about-face for Twitter. The latter shut down Vine in 2016 as part of a cost-cutting initiative. Part of the social media platform’s interest could be related to pure regret. TikTok thrived in a space that Vine once dominated before Instagram, and Snapchat overcame it.
The size of US activities by TikTok is uncertain. Although reports place it at hundreds of billions of dollars. While TikTok’s US market value remains a mystery, its Chinese parent company’s share stretches through billions of dollars. Many experts claim that ByteDance’s worth between $20 billion and $50 billion.
It is a recent argument, considering that the market capitalization of Twitter is about $29 billion. Microsoft’s total is more than $1.6 trillion. Twitter posted $7.8 billion in June, in terms of cash and short-term assets. Microsoft also announced $136 billion. Hey, Twitter has lost $1.23 billion in share last quarter.
People familiar with the matter said Twitter wouldn’t meet the same degree of regulatory pressure as Microsoft or other possible bidders. Nevertheless, Reuters notes that the private equity company Silver Lake, one of Twitter’s owners, is involved in helping to finance a future offer.
Twitter has also privately claimed that its bid will attract less regulatory oversight than that of Microsoft, and will not attract any competition from China because it is not involved in that region, sources said.
President Donald Trump ordered US businesses last Friday to stop doing business with the Chinese app in 45 days. The Trump administration reports that the Chinese government has access to TikTok acquired user information, which the company has consistently denied.
In reaction to the US president’s executive order, TikTok has threatened litigation against the US, calling the action “shocked.”
The US government has also imposed a ban on WeChat, a Chinese-owned messaging service, as strains between the two countries intensify.
Last week, Mr. Trump claimed he’ll support Microsoft’s plans to purchase US operations from TikTok, provided the government got a “substantial portion” of the profits.
“Even if the deal goes through, be it Microsoft or Twitter taking a substantial stake in TikTok, what remains to be seen is how both parties are going to move forward operationally,” said communications expert Sharon Koh.
She added the move will take a “tumultuous effort” for both companies to walk through the political sensitivities.