With many jurisdictions including the US and India turning the heat on short-video app TikTok, two of its investors — General Atlantic and Sequoia Capital — are considering taking the platform over from its owner ByteDance, which was founded in China and subsequently relocated its base.
According to a report by Financial Times, the two investment firms are in discussions with the US government and other regulators regarding the takeover and are considering spinning TikTok out and firewalling it from its parents to allay concerns raised by the United States. General Atlantic declined to comment for the story. ByteDance and Sequoia Capital did not respond to e-mail queries.
Last week, US President Donald Trump’s election campaign alleged that TikTok was “spying” on its American users. Last month, India banned TikTok (along with 58 other apps with Chinese links) citing a threat to national security. Since then, New Delhi has signalled a number of curbs against Chinese investment in India.
While ByteDance has undergone corporate restructuring for the main parent entity to be incorporated in Cayman Islands, the company — according to a Wall Street Journal report — is planning to move its headquarters out of Beijing, given the scrutiny it has come under from its biggest markets. Notably, India is the largest market for TikTok, with over 611 million downloads, representing nearly a third of the video-platform’s base, followed by China (where it operates under a different brand) and the US.
However, India does not make the cut as far as the top revenue-generating geographies are concerned for the app. In 2018-19, the first full year of the company’s operations in the country, Bytedance India posted revenues of Rs 43.6 crore, and the company targeted revenues of Rs 100 crore for the next year. In the US, the app has been downloaded 165 million times, with revenues of $86.5 million (over Rs 650 crore) in 2019. China, with nearly 197 million users, contributed $331 million (around Rs 2,500 crore) during the year, according to Sensor Tower.
The parent entity ByteDance Ltd, based in Cayman Islands, has five subsidiaries, one of which is TikTok Ltd (also based in Cayman Islands). TikTok Ltd is the parent entity of US-based TikTok LLC and Singapore-based TikTok Pte Ltd which owns the India-operating entity. In May this year, ByteDance appointed a new COO Kevin Mayer, who is also the CEO of TikTok. Mayer was roped in from Disney, where he oversaw the development and rollout of Disney+.
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