TikTok's Chinese Owners Eye Mega Payday as Competition to Buy App Heats up

As companies limber up to acquire TikTok, Oracle's entrance to the three-way bidding competition with Microsoft and Twitter has raised eyebrows.

The company, which is better known for software than for its involvement in social networks, held preliminary talks with Bytedance, TikTok's Chinese owner, according to accounts first reported by the Financial Times.

Since President Donald Trump issued an executive order at the beginning of August requiring ByteDance to sell off its U.S. operations and destroy data within 90 days, speculation has been rife about how much the app's parent company stands to gain.

The order states that ByteDance "shall divest all interests and rights" within 90 days in "any tangible or intangible assets or property, wherever located, used to enable or support ByteDance's operation of the TikTok application in the United States, as determined by" the Committee on Foreign Investment in the United States.

Bytedance hasn't shared a price for the video-sharing app yet, but reports from Reuters and from analysts polled by Bloomberg suggest it could fetch between $20 billion and $50 billion—a wildly higher price tag than the valuation of its peers. Reuters also reported that the app expects around $6 billion in revenue in 2021.

Zhang Yiming, Bytedance's founder is in for a big payday when the deal completes. As is Kevin Mayer, Bytedance's American COO and TikTok's CEO. Mayer was recently poached from Disney where he masterminded the launch of Disney Plus. He was named TikTok CEO in May.

According to business information website Crunchbase, ByteDance has raised a total of $7.4 billion in funding over 9 separate rounds. Its latest funding was raised on Mar 30, 2020 from a Secondary Market round.

The company is funded by 22 investors, Tiger Global Management and GGV Capital being the most recent of those. Tiger Global Management is an American hedge fund, while GGV was founded in Singapore.

According to Crunchbase, ByteDance has acquired 7 organizations. Its most recent was Baikemy.com on May 20, 2020.

Some have speculated that Oracle's entrance to the bidding war could primarily be a means to drive up the price of TikTok, forcing software rival Microsoft to pay inflated prices, a move which would be a coup for Bytedance and Chinese investors.

Oracle does have the edge on other bidders in that it has close ties to the White House. It is one of the few large Trump administration supporters in Silicon Valley. It's co-founder Larry Ellison recently held a fundraiser for Trump in Coachella.

Whoever ends up finalising the deal will have a big job on their hands, as splitting out TikTok's U.S. business will likely be complex and expensive.

A TikTok spokesperson told Newsweek: "We do not comment on rumours or speculation."

TikTok download page
The download page for the TikTok app is displayed on an Apple iPhone on August 7, 2020 in Washington, DC. On Thursday evening, President Donald Trump signed an executive order that bans any transactions between the parent company of TikTok, ByteDance, and U.S. citizens due to national security reasons. The president signed a separate executive order banning transactions with China-based tech company Tencent, which owns the app WeChat. Both orders are set to take effect in 45 days. Drew Angerer/Getty Images