KEVIN MAYER seemed like quite the catch for TikTok. He was poached from Disney, where he helped manage the Hollywood giant’s purchases of Pixar, Marvel Entertainment, Lucasfilm and 21st Century Fox, and built its well-received Disney+ streaming service. And yet, on August 27th, after just three months in the job, he stepped down as chief executive of the hit short-video platform. As he explained to colleagues, “the role that I signed up for—including running TikTok globally—will look very different as a result of the US administration’s action to push for a sell off of the US business.”
The actions in question are part of President Donald Trump’s campaign to force the sale of TikTok’s American operations to American investors. For months the administration has voiced fears about China’s government using TikTok, which is owned by a Chinese company called ByteDance, to harvest data on Americans and influence impressionable teenagers, the app’s main users, through censored, pro-Beijing content. TikTok’s protestations that it does not censor anything and would never hand user data over to the Chinese authorities fell on deaf ears. On August 6th Mr Trump issued an executive order imposing a 45-day deadline, later extended to 90 days, for American firms and people to cease any transactions with TikTok.
Unless, that is, the app is by then in American hands. Prospective buyers include Oracle, a big software firm, and Microsoft, a giant one. On August 27th it also emerged that Walmart, a supermarket colossus, is joining Microsoft’s bid. SoftBank, a Japanese technology conglomerate that already owns a small stake in ByteDance, is also said to be seeking some form of involvement.
Both Oracle and Microsoft sent in offers to ByteDance this week. A sale to one or the other of them could be announced as soon as next week. The price is expected to range from around $20bn to $30bn, but could go higher. ByteDance’s founder and boss, Zhang Yiming, would obviously prefer the larger figure. Even so, that looks like a bargain for what is widely regarded as the hottest social-media property around, with 100m American users. In an effort to try to avert a fire-sale provoked by Mr Trump’s deadline, on August 24th TikTok launched a lawsuit against the administration, arguing that his executive orders violate due process.
Mr Trump appears to favour Oracle, whose co-founder, Larry Ellison, is a rare supporter of the president’s in left-leaning Silicon Valley. Still, the bidding war is Microsoft’s to lose. It has much more cash and, thanks to a small consumer business, a somewhat less incongruous case to buy a social-media app than Oracle, which sells exclusively corporate software. Walmart adds heft to Microsoft’s bid, and could lessen the risk of a deal for its boss, Satya Nadella.
Mr Mayer’s departure has seemed inevitable for a while. He spent his career in Hollywood; people close to ByteDance reckon he lacks the technology chops to run TikTok once it is shorn from ByteDance. His appointment seemed primarily designed to show that TikTok was run by Westerners, not the Chinese. If so, it did not wholly succeed. Peter Navarro, Mr Trump’s trade adviser, labelled him a “puppet” of the Chinese just for taking the job. Besides calling out Mark Zuckerberg, Facebook’s boss, for agitating against TikTok to Mr Trump, Mr Mayer has largely avoided wading into the controversy.
His interim replacement, Vanessa Pappas, a former YouTube executive who since last year has run TikTok’s North American operations, has at least had more time to learn about ByteDance’s complex Beijing-based business. Mr Mayer probably had to do this by videoconference as a result of pandemic travel restrictions, while working his way through a Rolodex of politicians in Washington, DC. It is unclear how long Ms Pappas will keep her new role.
Integrating the app will be a huge headache for whichever buyer emerges victorious. The winner will have to decide how much autonomy to give TikTok once the deal is complete. TikTok shares some back-end technical resources, such as server code, with Douyin, ByteDance’s Chinese version of the app. The new owner will need a long transition period either to pull software out of Beijing or replicate it from scratch in America. Keeping some engineers who know the back end would help. It is unclear whether Mr Zhang will sell or share TikTok’s “secret sauce”—its personalised “for you” page which is driven by ByteDance’s own machine-learning algorithm and data.
Most important, TikTok’s chief product architect—and true boss—has always been Mr Zhang. The question now is whether any future TikTok boss can replicate his magic touch. It would help greatly if TikTok could maintain close ties with ByteDance in a transition period. That, though, could fall foul of Mr Trump. Joe Biden, the president’s Democratic rival in November’s election, is less hawkish on China. But he is not exactly China-friendly, either. In July he told his campaign staff to delete TikTok from their personal and work phones.
Meanwhile, TikTok’s rivals are circling. Instagram Reels, a TikTok lookalike owned by Facebook, launched on August 5th. YouTube plans to launch another, called Shorts, later this year. Like Mr Mayer, TikTok’s suitors may find life harder than they expected.