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Is TikTok edging closer to a sale?

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Happy New Year, everybody! I hope your re-entry into working life went reasonably smoothly. 2020 is s
 
January 6 · Issue #434 · View online
The Interface
Happy New Year, everybody! I hope your re-entry into working life went reasonably smoothly. 2020 is shaping up to a big year for this newsletter: it will see the most critical election of my lifetime, three hotly anticipated books about Facebook; and several live events where you’ll be able to talk about it with me and Zoe in person. Thanks for reading, and as always, keep those smart replies coming.
In November, we talked here about how some of the threats against TikTok were starting to add up. National security officials had begun to investigate the Chinese looping video app as a potential national security threat. Meanwhile, the Committee on Foreign Investment in the United States launched an inquiry into whether TikTok’s owner, ByteDance, should be required to spin off the American app Musical.ly, which it bought in 2017 and helped form the basis for TikTok.
Over the break, the already fast-moving story seemed to accelerate. First the US Navy banned TikTok on government-issued phones, and the Army followed suit December 30th. And with the US public sector souring on the app, its owner began making moves.
Just before Christmas, a team at Bloomberg reported that ByteDance is considering a sale of the app:
The Beijing-based company, led by Chief Executive Officer Yiming Zhang, is weighing a range of options to address those concerns, according to people familiar with the matter. Advisors are pitching everything from an aggressive legal defense and operational separation for TikTok to sale of a majority stake, said the people, asking not to be named because the discussions are private. Selling more than half the business could raise substantially more than $10 billion, one person said. […]
ByteDance has considered selling a chunk of TikTok if necessary to protect the value of the business, the people said. The most likely sale scenario would be for the company to sell a majority stake to financial investors, one person said. Earlier investors include SoftBank Group Corp., Sequoia Capital and Susquehanna International Group.
ByteDance denied the story categorically, calling it “completely meritless. "We have had no discussions with potential buyers of TikTok, nor do we have any intention to,” TikTok chief Alex Zhu said in an internal email published by Reuters.
I haven’t done any independent reporting on this, but Bloomberg’s wording leaves open the possibility that ByteDance has held discussions with advisers about contingency plans, including a partial sale, but decided not to pursue it at the moment.
Meanwhile, as part of a broader effort to distance TikTok from China, ByteDance is seeking a a new headquarters for it in another country, report Shan Li and Liza Lin at the Wall Street Journal:
Singapore is one city being considered, the people said. Other possible locations include London and Dublin, with no American cities on the shortlist, one person said. TikTok currently doesn’t have a headquarters, although its most-senior executive is based in Shanghai and its main office, which runs U.S. operations, is in Los Angeles.
Senior executives at Beijing-based Bytedance—a startup valued at $75 billion, which owns numerous apps including TikTok—have been brainstorming ideas to rebrand TikTok as it comes under mounting scrutiny from U.S. lawmakers over national-security concerns. A headquarters outside of China would also bring TikTok closer to growing markets either in Southeast Asia or Europe and the U.S.
And as part of that same effort to put daylight in between ByteDance and China, the company issued its first transparency report, in which it said it had not received a single takedown request from the Chinese government. Here’s our own Zoe Schiffer:
The US submitted the second highest number of overall requests, beat out only by India, which submitted 107 requests for user data and 11 requests for content takedowns. That’s likely because TikTok is wildly popular in both countries. It could also explain why China isn’t in the report, since the app doesn’t operate there. The Chinese version of the app, which runs as a separate organization, is called Douyin.
If you’ve wondered how seriously you ought to take the threat of a potential US case against TikTok, these stories suggest that the answer is: quite seriously. In public, ByteDance is working to quell American fears about censorship and national security. And in private, the company is working on Plan B.
A bad scenario for ByteDance would be that the United States forces it to unwind the Musical.ly deal, crippling TikTok just as it hits its stride. (It’s making an estimated $50 million a quarter, up three to five times from the previous year.) A better scenario would be to beat the government to the punch, selling a majority stake on its own terms while it’s still able to do so. Still, I imagine that most within ByteDance would still rather avoid any of these scenarios, and just keep running TikTok as it is.
And yet — how likely does it seem to you that ByteDance will ultimately have that option? The company hasn’t caught a break on the regulatory front in recent memory. The trade war with China shows no signs of ending — or even de-escalating — this year. It no longer seems unlikely to me that TikTok could be reborn as an American citizen. And it might happen sooner than we all expect.

The Ratio
Today in news that could affect public perception of the big tech platforms.
🔽 Trending down: Amazon threatened to fire employees for speaking publicly about the company’s role in the climate crisis, according to leaked emails. Employees have been calling for the company to do more to fight climate change.
🔼 Trending up: Tumblr is rolling out an internet literacy initiative to help combat misinformation and cyberbullying ahead of the 2020 election. The campaign, called World Wide What, is made up of educational videos. 
Governing
In a tweet, Trump told Congress to follow him on Twitter for updates on a possible war with Iran. The news came after he ordered the assassination of a top Iranian commander without giving notice to congressional leaders. T.C. Sottek at The Verge has the story:
Trump has long used Twitter to harass, insult, and demean his enemies, and as president, he has used the platform to issue surprise orders, announcements, and even threats against other nations like North Korea. In 2018, Trump fired Secretary of State Rex Tillersonby tweet. More generally, federal agencies have struggled to reckon with the president’s use of Twitter during his administration, often wondering whether his mercurial pronouncements should be handled as official government policy.
Nonetheless, Trump’s recent tweets are an improbable escalation of his use of the platform to incite geopolitical disorder and marginalize Congress. They may also signal illegal behavior; according to Yale Law School processor Oona Hathaway, Trump “cannot notify Congress under the War Powers Resolution by tweet.” (Trump also later posted the same message on Facebook.)
After a US drone strike killed the Iranian commander, a wave of pro-Iranian social media propaganda flooded Twitter. The messages came from accounts claiming to be located in the Middle East and pushed out many thousands of tweets under a handful of hashtags, including #HardRevenge and #DeathToAmerica. (Jeff Stone / CyberScoop)
A former Cambridge Analytica employee leaked tens of thousands of documents related to the firm’s work in 68 countries around the world. The leaks, which began on New Year’s Day and are set to continue over the next few months, reveal the global infrastructure of an operation intended to manipulate voters on “an industrial scale.” But did it? I remain totally skeptical of the entire enterprise. (Carole Cadwalladr / The Guardian)
California’s new privacy law went into effect January 1st, but companies can’t agree on what many of the provisions actually mean. The new law is supposed to give Californians the right to see, delete and stop the sale of their personal details, but the rollout has been rocky. (Natasha Singer / The New York Times)
Presidential candidate Mike Bloomberg is pouring tens of millions of dollars from his vast personal fortune into his campaign. A piece of it is going to an unknown digital business called Hawkfish — which Bloomberg himself founded during the spring. (Brian Schwartz and Tucker Higgins / CNBC)
Breitbart is crushing mainstream media outlets on Facebook. With just 4 million followers, Breitbart’s page racked up more likes, comments, and shares since September 1st than The New York Times, Washington Post, Wall Street Journal, and USA Today combined. (David Uberti / Vice)
Right-wing publishers have found a way to circumvent Facebook’s rule prohibiting them from sharing a whistleblower’s name on the platform. You can just put the name in the URL of your trash story and then it won’t get deleted. (Ryan Broderick / BuzzFeed)
Twitter made us better by changing whose voices we heard, this writer argues. “Many people who lacked public platforms 10 years ago — the young and members of marginalized groups in particular — are speaking up,” she said. (Sarah J. Jackson / The New York Times)
YouTube officially rolled out changes to children’s content following an FTC settlement. Now, targeted ads will be restricted from running on kids’ videos, and kids’ videos will lose access to comments and some other community features. (Julia Alexander / The Verge)
Spotify is suspending the sale of political advertising on its platform ahead of the 2020 election. “At this point in time, we do not yet have the necessary level of robustness in our process, systems and tools to responsibly validate and review this content,” the company said in a statement.
A US veteran named Kristofer Goldsmith is fighting to warn veterans about targeted Russian disinformation ahead of the 2020 election. So far, few are paying attention. His fear is that if the the government and platforms can’t come together to protect veterans, then perhaps they can’t protect the election itself. (Jane Lytvynenko / BuzzFeed)
Misinformation about the Australian bushfires is spreading on Facebook, Twitter, and Instagram. BuzzFeed did a roundup of the most prolific fake stories. (Cameron Wilson / BuzzFeed)
China released a new set of internet censorship rules to define what content is illegal and what content should be encouraged. They also highlight the role that algorithms play in recommending content to users. (Yoko Kubota / The Wall Street Journal)
France ruled that customs and tax authorities can review people’s social media profiles to detect tax avoidance and undeclared income. The motion sparked concern from the French data protection authority, who challenged its implications for people’s privacy. (Reuters)
Industry
Facebook announced that it has overhauled its Privacy Checkup tool, which allows users to quickly tweak a range of data-sharing settings at once. The new interface rolls out to users globally starting today. Louise Matsakis at Wired explains the changes:
When Privacy Checkup was first created in 2014, it focused on only three areas: who could see your posts, what kind of information was on your profile, and the third-party apps, such as mobile games, that had access to your Facebook data. The tool has now evolved to encompass eight different topics divided into four distinct areas. But it doesn’t cover many of the data collection abilities at the heart of Facebook’s past scandals. Unlike Google’s Privacy Checkup, the Facebook version is more about protecting your information from other people on Facebook, rather than limiting what the social network can collect about you in the first place or how it can use that data.
Ring announced that it is adding a new privacy dashboard to its mobile apps to let users manage their connected devices, third-party services, and whether local police partnered with Ring can make requests to access video from the Ring cameras on the account. The move comes after months of criticism of the Amazon subsidiary. (Dan Seifert / The Verge)
Amazon is building a homeless shelter on its Seattle campus. The shelter will be run by Mary’s Place, a nonprofit that has worked with the company for years. (Aria Bendix / Business Insider)
Instagram user growth is estimated to drop to single digits for the first time, from 10.1 percent in 2018 to 6.7 percent in 2019. The trend is likely partly due to the fact that older age groups are not joining the platform as quickly as anticipated. (Amy He / eMarketer)
A gaming talent agency called Loaded is threatening the Twitch monopoly by inducing competition into video game streaming. The company is pitting tech giants against each other for the biggest gamers in the world, many of whom are Loaded clients. (Mitch Reames / The Verge)
Bumble momentarily blocked Sharon Stone after users reported her profile as fake. The company reinstated her account after she tweeted about the experience, asking Bumble not to shut her out of the hive. (BBC)
And finally ...
Mark Zuckerberg has more money than one could ever possibly spend, but he’s still pinching pennies … and his hunt for a bargain brought him to Costco.
If TMZ thinks that’s a bargain, wait till they find out he got Instagram for $1 billion.
Talk to us
Send us tips, comments, questions, and TikToks to: casey@theverge.com and zoe@theverge.com.
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