The U.S. wants ByteDance to sell TikTok. China is almost certainly going to refuse
Visitors are visiting TikTok’s stand at the Appliance & Electronics World Expo (AWE) in Shanghai, China, on April 27, 2023. On March 14, 2024, the United States will pass a bill banning TikTok.
CostFoto | Nurphoto | Getty Images
The U.S. could be about to force ByteDance, the Chinese tech giant that owns TikTok, to divest its U.S. business or effectively ban the app.
But a sale looks unlikely — not least because China is expected to block it.
The House on Wednesday approved a bill that requires ByteDance to divest TikTok, the social media platform it owns, within roughly six months for the app “to remain available in the United States.” This bill is not yet law and needs approval from the Senate.
Washington has long argued that TikTok poses a national security threat as American data could get into the hands of the Chinese government.
Lawmakers in the U.S. are also concerned about the short video app’s alleged ties to the Chinese Communist Party, which the company has denied.
If the bill is passed, however, the Chinese government is unlikely to approve the divestiture of TikTok’s U.S. business.
“The problem is that the Chinese government is unlikely to approve this type of forced … merger and acquisition,” Paul Triolo, an associate partner at consulting firm Albright Stonebridge, told CNBC’s “Street Signs Asia” on Thursday.
“Any kind of divestiture and then merger with another company or acquisition would have to be approved by the Chinese government, which would probably reject that and is probably advising ByteDance that it would reject that.”
What has China said?
Wang Wenbin, a spokesperson for China’s Ministry of Foreign Affairs, said Thursday that the U.S. bill is “at odds with the principles of fair competition and international trade rules,” according to an NBC News translation.
“If the pretext of national security can be used to suppress excellent companies from other countries arbitrarily, there is no fairness or justice to speak of. It is a complete logic of theft to see something good and try to take it for oneself by any means necessary.”
China is widely expected to block a deal, not least because this isn’t the first time the issue has arisen.
Last year, the U.S. Committee on Foreign Investment in the United States (CFIUS) told ByteDance to divest TikTok or face a ban. At the time, Shu Jueting, a spokesperson for China’s Ministry of Commerce, said the country would “firmly oppose” a move by the U.S. to mandate a sale of TikTok.
TikTok algorithm at the center
What complicates a sale further is TikTok’s algorithm. This is the app’s “secret sauce” and is the technology that enables it to recommend content to users to keep them engaged.
Last year, when CFIUS told ByteDance to sell TikTok, China’s Shu addressed this, saying a divestiture or sale would effectively mean exporting this technology, which must go through administrative licensing procedures.
China would have to approve the transfer of the algorithm as part of the sale, Triolo said — something that seems very unlikely.
And it’s hard to imagine how TikTok’s U.S. business could be separated from the algorithm if China did not want that to be part of the deal. TikTok requires the algorithm to function.
“This algorithm is Chinese home-grown technology, and the Chinese state has said on multiple occasions that [it] considers technology like this to be important for its national security. Hence, it will not allow Chinese technology of this nature to leave its shores or to be in the hands of countries which it considers unfriendly,” Richard Windsor, founder of research company Radio Free Mobile, said in a note published Monday.
“This makes a severing of ties between ByteDance and TikTok USA highly problematic as TikTok USA needs the algorithm to function, but this will contravene the wishes of the Chinese government and the laws it has put in place.”
TikTok’s big valuation
TikTok is one of the world’s biggest social media apps, posing a serious challenge to the likes of Facebook-owner Meta and Snap. TikTok was the most downloaded social media app in the U.S. in 2023, according to market insight firm Sensor Tower.
That makes TikTok hot property. Angelo Zino, a vice president and senior equity analyst at CFRA Research, told CNBC that it’s possible that TikTok’s U.S.-only business “could fetch a valuation north of $60 billion.”
Given the uncertainty over the algorithm, however, and Chinese government approval looking unlikely, it’s far from certain that a U.S. TikTok sale will even get to the valuation stage.
– CNBC’s Jonathan Vanian contributed to this report.
The Datadog stand is being displayed on day one of the AWS Summit Seoul 2024 at the COEX Convention and Exhibition Center in Seoul, South Korea, on May 16, 2024.
Chris Jung | Nurphoto | Getty Images
Datadog shares were up 10% in extended trading on Wednesday after S&P Global said the monitoring software provider will replace Juniper Networks in the S&P 500 U.S. stock index.
S&P Global is making the change effective before the beginning of trading on July 9, according to a statement.
Computer server maker Hewlett Packard Enterprise, also a constituent of the index, said earlier on Wednesday that it had completed its acquisition of Juniper, which makes data center networking hardware. HPE disclosed in a filing that it paid $13.4 billion to Juniper shareholders.
Over the weekend, the two companies reached a settlement with the U.S. Justice Department, which had sued in opposition to the deal. As part of the settlement, HPE agreed to divest its global Instant On campus and branch business.
While tech already makes up an outsized portion of the S&P 500, the index has has been continuously lifting its exposure as the industry expands into more areas of society.
DoorDash was the latest tech company to join during the last rebalancing in March. Cloud software vendor Workday was added in December, and that was preceded earlier in 2024 with the additions of Palantir, Dell, CrowdStrike, GoDaddy and Super Micro Computer.
Stocks often rally when they’re added to a major index, as fund managers need to rebalance their portfolios to reflect the changes.
New York-based Datadog went public in 2019. The company generated $24.6 million in net income on $761.6 million in revenue in the first quarter of 2025, according to a statement. Competitors include Cisco, which bought Splunk last year, as well as Elastic and cloud infrastructure providers such as Amazon and Microsoft.
Datadog has underperformed the broader tech sector so far this year. The stock was down 5.5% as of Wednesday’s close, while the Nasdaq was up 5.6%. Still, with a market cap of $46.6 billion, Datadog’s valuation is significantly higher than the median for that index.
— CNBC’s Ari Levy contributed to this report.
CNBC: Datadog CEO Olivier Pomel on the cloud computing outlook
A representation of cryptocurrency Ethereum is placed on a PC motherboard in this illustration taken on June 16, 2023.
Dado Ruvic | Reuters
Stocks tied to the price of ether, better known as ETH, were higher on Wednesday, reflecting renewed enthusiasm for the crypto asset amid a surge of interest in stablecoins and tokenization.
BitMine Immersion Technologies, a bitcoin miner that announced plans this week to make ETH its primary treasury reserve asset, jumped about 20%. It’s gained more than 1,000% since the announcement. Betting platform SharpLink Gaming, which has also initiated an ETH treasury strategy, added more than 11%. Bit Digital, which last week exited bitcoin mining to focus on its ETH treasury and staking plans, jumped more than 6%.
“We’re finally at the point where real use cases are emerging, and stablecoins have been the first version of that at scale but they’re going to open the door to a much bigger story around tokenizing other assets and using digital assets in new ways,” Devin Ryan, head of financial technology research at Citizens.
On Tuesday, as bitcoin ETFs snapped a 15-day streak of inflows, ether ETFs saw $40 million in inflows led by BlackRock’s iShares Ethereum Trust. ETH ETFs came back to life in June after much concern that they were becoming zombie funds.
The price of the coin itself was last higher by 5%, according to Coin Metrics, though it’s still down 24% this year.
Ethereum has been struggling with an identity crisis fueled by uncertainty about the network’s value proposition, weaker revenue since its last big technical upgrade and increasing competition from Solana. Market volatility, driven by geopolitical uncertainty this year, has not helped.
The Ethereum network’s smart contracts capability makes it a prominent platform for the tokenization of traditional assets, which includes U.S. dollar-pegged stablecoins. Fundstrat’s Tom Lee this week called Ethereum “the backbone and architecture” of stablecoins. Both Tether (USDT) and Circle‘s USD Coin (USDC) are issued on the network.
BlackRock’s tokenized money market fund (known as BUIDL, which stands for USD Institutional Digital Liquidity Fund) also launched on Ethereum last year before expanding to other blockchain networks.
Tokenization is the process of issuing digital representations on a blockchain network of publicly traded securities, real world assets or any other form of value. Holders of tokenized assets don’t have outright ownership of the assets themselves.
The latest wave of interest in ETH-related assets follows an announcement by Robinhood this week that it will enable trading of tokenized U.S. stocks and ETFs across Europe, after a groundswell of interest in stablecoins throughout June following Circle’s IPO and the Senate passage of its proposed stablecoin bill, the GENIUS Act.
Ether, which turns 10 years old at the end of July, is sitting about 75% off its all-time high.
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