TikTok parent ByteDance to keep 50% of profits after Trump-brokered sale | Latest Tech News
TikTok’s Chinese proprietor is poised to keep roughly half the profits from the app’s US business — even after ceding majority possession to US buyers under a deal pushed by President Trump, according to a report.
People acquainted with the talks told Bloomberg News that ByteDance would pocket both a licensing payment for TikTok’s prized algorithm and a revenue share tied to its remaining equity stake in the US enterprise.
That would seemingly go away ByteDance with a whole of 50% or more of TikTok US earnings once the sale is accomplished, according to Bloomberg.
President Donald Trump has pushed a deal requiring ByteDance to promote majority control of TikTok’s US operations. Getty Images
The association might help clarify the Trump group’s floated $14 billion valuation for the US unit — a quantity that fell sorely short of analyst estimates of $35 billion to $40 billion.
The US-backed shopping for group is anticipated to embody Oracle Corp., Silver Lake Management and Abu Dhabi-based MGX, alongside present buyers. Collectively, they might maintain about 80% of TikTok US.
Sources told The Post that some of the big US buyers controlling the new US TikTok are presently buyers in Bytedance who can be “rolling” their shares into the new entity to keep away from a major taxable event. Accordingly, the sources said it could be that US buyers will account for a chunk of the 50% of profits that are said to be going to Bytedance.
Nevertheless, under the draft plan the Chinese also are getting paid a fats licensing payment — about 20% of revenues generated through the “special sauce” suggestion algorithm that can be tweaked by Oracle to deal with US security issues.
At $20 billion in gross sales, for instance, that would quantity to $4 billion for ByteDance, according to a source — coming straight out of US TikTok’s income and thereby deflating its worth. The Beijing-based company also would retain about 20% of profits on the remaining income through its possession stake.
TikTok’s Chinese parent ByteDance is anticipated to keep about half of the US unit’s profits under the proposed sale. REUTERS
That didn’t stop some consultants from raising questions about the rock-bottom valuation for US TikTok that acquired disclosed late Thursday.
Ashwin Binwani, founder of Alpha Binwani Capital, told Bloomberg News that the proposal “could be the most undervalued tech acquisition of the decade,” arguing the determine displays just a third of TikTok’s true price.
The deal stays unresolved despite Trump’s insistence that he struck an understanding with Chinese President Xi Jinping during a call last week.
Chinese officers haven’t publicly confirmed any settlement, and the precise phrases are still being negotiated.
Vice President JD Vance, who revealed the $14 billion price tag on Thursday, conceded that the final word buy price can be decided by the buyers.
ByteDance is slated to earn both a licensing payment for TikTok’s algorithm and a revenue share tied to its remaining stake. REUTERS
The Biden administration had beforehand signed laws requiring ByteDance to divest TikTok US or face a nationwide ban. Trump has repeatedly prolonged the deadline while brokering talks with patrons, claiming assist on the platform helped secure his 2024 election win.
The Post has sought remark from ByteDance, TikTok and the White House.
The Chinese embassy in Washington told Bloomberg News that the US “needs to provide an open, fair and non-discriminatory environment for Chinese investors.”
With the profit-sharing construction still in flux, analysts warn that US patrons may very well be paying bargain-basement costs for an app that dominates the short-video market and generates more than $10 billion a 12 months in American income.
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