SWITZERLAND, AUGUST 10 – Twitter has approached TikTok’s Chinese owner, ByteDance to express interest in acquiring the US operations of the video-sharing app.
The popular video-sharing platform, TikTok has been at the centre of fierce debate in recent weeks and takeover talk.
Tech giant, Microsoft is the front-runner to buy TikTok but now Twitter has emerged as a possible rival.
However, Sources quoted in the Wall Street Journal have expressed their skepticism regarding Twitter’s ability to buy TikTok and complete the deal within the 45-day window.
“Twitter will have a hard time putting together enough financing to acquire even the US operations of TikTok. It doesn’t have enough borrowing capacity”, said Erik Gordon, a professor at the University of Michigan.
“If it (Twitter) tries to put together an investor group, the terms will be tough. Twitter’s own shareholders might prefer that management focus on its existing business”, he added.
According to estimates, the value of TikTok’s US operations stands at tens of billions of dollars while Twitter’s market capitalisation is about $29bn, dwarfed by Microsoft’s at more than $1.6tn.
Yet, experts believe a possible Twitter deal would face less regulatory scrutiny than Microsoft’s.
Last Friday, President Trump ordered US firms to stop doing business with the Chinese app within 45 days. The Trump administration claims that the Chinese government has access to user information gathered by TikTok, which the firm has consistently denied.
In response to the US president’s executive order, TikTok has threatened legal action against the US saying it was “shocked” by the move.
The US government also unveiled a ban on the Chinese-owned messaging app, WeChat as tensions escalate between the two countries.
Trump said he would support Microsoft’s efforts to buy TikTok’s US operations if the government got a “substantial portion” of the proceeds.
He has set a deadline of 15 September for the deal to be completed or the ban will go ahead.
Microsoft said it “will move quickly to pursue discussions” for TikTok’s operations in the US, Australia, Canada and New Zealand.
“Even if the deal goes through, be it Microsoft or Twitter taking a substantial stake in TikTok, what remains to be seen is how both parties are going to move forward operationally,” said communications expert Sharon Koh.
“It will also take a tumultuous effort for both organisations to meander through the political sensitivities,” she added.