It might be a dull day elsewhere in the technology news world, but today there’s quite a bit of interest in the latest in the saga of U.S. efforts to ban TikTok because of its Chinese ownership.
Today’s news comes in the form of indicators that Microsoft, which has been touted as a likely purchaser of TikTok platform, has a new challenger in Oracle, a legacy technology company with leadership reported to be favorable to the ideas and actions of a one Mr. Donald Trump.
“Until now, Microsoft has been considered the frontrunner in the efforts to find an American buyer,” writes Sam Byford at The Verge. “The FT corroborates earlier reporting from The Wall Street Journal that said Twitter had also expressed an early interest, but there are said to have been “serious concerns” about its financial capacity for the deal. While ByteDance hasn’t named a price publicly, TikTok’s success propelled it to become the world’s most valuable startup in 2018.”
Trump has already given an ultimatum on a timeline – by sometime this fall, TikTok has to be U.S.-owned, or its American operations will, ostensibly, be forever banned. It’s emblematic of the kind of trade unilateralism that many in the financial world have concerns about – unprecedented meddling in purely financial affairs by a given state’s political needs.
Now, journalists report that Oracle is working with capital firms General Atlantic and Sequoia Capital to try to raise money for a deal that would take over, not only TikTok’s U.S. operations but also its networks and activities in Canada, Australia and New Zealand.
To some following the story, the big question is which firm will get the shotgun wedding – but to others, the more general question is how this kind of protectionism will roil markets. U.S./China trade relations have been deteriorating for a couple of years, and early on, investors saw that as a big red flashing warning light. However, many would point to current stock market rally activity, suggesting that the markets have never been better, although others think it’s a supply and demand issue.
“How can the market stay so overbought?” writes Lucas Downey at Investopedia August 3. “The answer is simple: there is no selling. I’ve learned in my career that there is really only one thing that moves stocks – supply and demand. When there’s little supply, stocks don’t sink.”
It’s likely that on both fronts, we’ll get an answer by the end of the autumn season. Either TikTok will be U.S.-owned, or it will be blacklisted for American users, and either the market will be flourishing, or people will already be scrambling to fix their 401(k)s.
Do your research, and make your predictions.
