A group of US tech investors could seek to buy a majority stake in Chinese-owned social media platform TikTok in order to neutralise national security concerns surrounding the video-sharing application.
According to reports by The Information and the Financial Times on Thursday, a small part of investors, headed by venture capital firms General Atlantic and Sequoia Capital, are currently involved in talks with US regulators about acquiring the social media company.
It is currently unknown what price the investors would be willing to pay. ByteDance, the Beijing-base company that owns TikTok, was valued at $75 billion as of 2018, but TikTok itself is not considered profitable.
However, ever since lockdown measures were introduced amid the coronavirus pandemic there has been a boost in downloads of the app to more than 2 billion.
“It is young and it is early on in the monetisation process”, one potential investor said while speaking to the FT.
“But it is a unique asset", they added.
Facebook’s Instagram also confirmed on Thursday that it will be launching its own competitor to TikTok - Reels - a platform designed for the creation of 15-second videos.
Reels launched in India following the ban of TikTok ban in the country and is due for a US launch in August. It has also been tested in Brazil, France, and Germany.
“The community in our test countries has shown so much creativity in short-form video, and we’ve heard from creators and people around the world that they’re eager to get started as well”, a Facebook spokesperson said in a statement
The move comes as US lawmakers are engaged in internal discourse over whether they should follow the Indian example and ban TikTok for its alleged connection to the Chinese government.
As part of a series of amendments to the National Defense Authorization Act, the House of Representatives voted 336-71 to block TikTok from devices issued to US lawmakers.
President Donald Trump’s re-election campaign has ramped up it's anti-China messaging, claiming that TikTok has been “spying” on US users. ByteDance has adamantly rejected the claims.
The move has received sympathy across both parties. Senate Democratic leader, Chuck Schumer, and Republican Senators Tom Cotton and Josh Hawley have all raised concerns over claims that US customer data could end up in the hands of the Chinese government.
Larry Kudlow, the Trump administration's chief economic adviser, revealed last week that no decision has yet been made but said that TikTok could “pull out” from its parent company and operate as an "independent American company”.
TikTok has begun to draw a line of delineation between itself from Beijing as relations between the US and China have become increasingly strained.
The app exited the Hong Kong market in early July after the city passed a security law and is seeking a headquarters outside of China. Former Disney chairman Kevin Mayer recently took over as the CEO of the app and is increasing its lobbying capacity.
TikTok announced on Tuesday it plans to create 10,000 US jobs over a three year period, a massive increase from the current 1,400 headcount it boasts after a tripling of its workforce in 2020.