TikTok deal must be fair, minimize politics

Source: Global Times Published: 2020/8/12 21:06:04

Photo: IC

A reported survey of Microsoft employees indicates that there is considerable negative feeling among its staff toward a potential acquisition of Chinese social media app TikTok's operations in the US because the deal is viewed as "unethical."

The finding may inspire sympathy for the Chinese tech company, but it does nothing to relieve TikTok's impasse caused by the US government's suppression. The clock is ticking on TikTok after US President Donald Trump signed an executive order to ban the app unless it could cut a deal with Microsoft or another US buyer by the September 15 deadline. 

As such, it is meaningless to criticize any company interested in the TikTok deal under the current circumstances, because what really matters to the app's fate is whether or not its Chinese owner ByteDance can sell it within the timeframe at a reasonable valuation.

It is, of course, understandable that political complexity and uncertainty has put TikTok at a great disadvantage in the negotiations, making a fair offer less likely.

For Microsoft, its participation in a US government-led "robbery-like" takeover has already been viewed by some people as unethical. It would be even more humiliating for such a prestigious company if it acquired a popular app at an outrageously low price by taking advantage of the hostile political environment. 

As such, while Microsoft may gain more leverage in the negotiations, it is still imperative for it to ensure the final price is fair and equitable, with a valuation that falls into a reasonable market pricing range.

There are undoubtedly numerous views on how TikTok should be priced. Some analysts estimated the value of its US businesses could be anywhere from $20 billion to $50 billion, and the wide range could represent the mixed impacts of various factors. While TikTok is facing US political suppression, we still hope the negotiation process and the final offer will be as free of politics as possible.

Given the political complexity of the situation, some may argue that TikTok's valuation could be significantly lower due to the headwinds it faces and the looming deadline. If the deal is priced at an unreasonably low level and the US government still wants "a cut" of the deal, it would be up to ByteDance to decide whether the sale should still go through or not.

Even if the TikTok deal can be concluded before the deadline, it sets a bad precedent in an open economy. This should never happen again or it would be a disastrous distortion of market competition.

Posted in: GT VOICE

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