Author Zheng Xuan
The finale of tiktok, the annual variety show of the technology industry, is even more complicated.
Who is its buyer? What is the trading time? It may not be sold again? As of September 3, the sale of tiktok’s US business is still in the fog.
The latest news is that on September 3, Reuters said potential buyers of tiktok proposed four possible acquisition options, including the acquisition of tiktok’s U.S. business without the inclusion of its key algorithmic technology — a response to China’s adjustment of its technology export list on Friday (August 28). But without its interest in recommendation algorithms, tiktok may not be worth $30 billion.
The deal may also be on the table of Zhang Yiming, founder of tiktok, who was said the day before (September 2) to reconsider tiktok’s prospects and may refuse to sell.
It also led to the collapse of the original deal – within 48 hours. Earlier, CNBC said tiktok had reached a deal as early as September 1 (Tuesday) local time at a price of $20-30 billion.
On September 2, U.S. President trump reiterated that tiktok’s U.S. operations would be shut down if the deal was not completed within the agreed 45 days, that is, by September 15.
As time goes by, it becomes more and more complicated to reach a deal. The other three options mentioned by Reuters include:
1. The U.S. Commission on foreign investment (CFIUS) negotiates a transition period of up to one year;
2. Seek Chinese approval to transfer tiktok’s algorithm to its US asset buyer
3. The algorithm is authorized to the buyer of tiktok assets involving byte skipping
The trading scheme is complex, the trading time is different, the transaction price is changeable, and the buyer’s portfolio is more and more strange.
Microsoft first joined Oracle, an old enterprise software company backed by investors such as redwood capital, which has byte hopping shareholders. It seems that it has nothing to do with short video. Then there was Wal Mart, a retail retailer. It was said that it had formed a consortium with Softbank and Google’s parent company in Japan to participate in the bidding, but it had no choice but to give up because the buyer had to be an American company.
Now, Microsoft and Wal mart are bidding together.
Just as the deal was in a fog, tiktok’s CEO, Kevin Mayer, resigned abruptly. At that time, byte executives, including Zhang Yiming, chairman of byte jump and Mr. papas, interim CEO of tiktok, said that they would give the final plan in a few days, and many foreign media reported that the transaction was about to be completed.
But now, the final question is not just who tiktok will “flower”. With the adjustment of China’s technology export catalogue, there are more and more variables in this “transaction” of byte skipping.
What’s next for tiktok? As the most important part of globalization, tiktok’s main market is gone. Who else can support the global dream of byte beating? Globalization into the slow lane, why byte quietly return to domestic business?
Tiktok sells himself for a month
The past month has been tiktok’s “dark moment.”.
On the evening of July 31, trump announced on the US presidential plane “Air Force One” that tiktok would be banned from operating in the United States.
Prior to this, it is said that in July, led by Microsoft founder Bill Gates, byte hopping had been secretly negotiating with Microsoft on the deal of tiktok’s U.S. business for several weeks. According to the content of the negotiations, byte hop will retain a minority stake in tiktok, which was originally expected to reach a preliminary agreement on August 3.
But Trump’s sudden announcement disrupted the pace of all participants in the negotiations.
According to the New York Times, several white house advisers who actively promoted the deal were very angry. Officials, including Treasury Secretary manu munchin, wanted to persuade trump to support Microsoft’s acquisition plan. The “traditionalists” also argued that the emergence of tiktok would add a strong competitor to the market and break the monopoly situation of Facebook and twitter.
After some games and negotiations, Microsoft announced on August 2 that it would negotiate with the parent company of tiktok on September 15 to acquire businesses in the United States, Canada, New Zealand and Australia. Trump, who was convinced, made an unprecedented demand the next day: the White House would draw a percentage because he was the one who facilitated the deal.
The impending ban period, let the byte jump in the negotiation is quite unfavorable. According to the financial times, the consortium led by Sequoia United States and transatlantic investment had considered acquiring most of tiktok’s shares from byte jump. Their valuation was about $50 billion, 50 times of tiktok’s expected revenue of $1 billion in 2020.
Trump’s ban has reduced the value of tiktok to some extent. CNBC has reported that the final deal will be closed for $20-30 billion. Caixin.com reported that people close to the deal had previously said that tiktok’s valuation in four North American countries had been pushed down to $10 billion.
Just a few days ago, the Ministry of Commerce of China adjusted the catalogue of restrictions on technology exports to allow tiktok’s business transactions in the four North American countries to regenerate variables.
Cui fan, a professor at China University of foreign economic relations and trade, said in an interview with the media that the technology exporters who have not completed the transaction when the new catalogue comes into effect should suspend the negotiation and trade procedures and complete the relevant application procedures if they are ready to export the restricted technologies in the adjusted catalogue.
In particular, he mentioned tiktok, “it is suggested that byte jump carefully study the adjusted catalog, seriously and carefully consider whether it is necessary to suspend the substantive negotiation of relevant transactions, perform the legal declaration procedures, and then take further actions as appropriate.”
Byte skipping will also respond later, and will process the related business of technology export according to the program.
The screenshot is from the Ministry of Commerce of China
According to the documents published on the official website of the Ministry of Commerce of China, “personalized information push service technology based on data analysis” is added to the information processing export restriction project.
According to the Wall Street Journal, a person familiar with the matter said that prior to the export catalog changes, the recommended algorithm for byte skipping was considered part of the deal. Industry analysts believe that the key to tiktok’s rapid growth is the core algorithm that can recommend video content based on people’s preferences.
At present, both sides of the transaction are trying to determine whether the order means that the transfer of the above algorithm needs to be approved by the Chinese commerce department, and if so, the complexity involved reduces the chance that the transaction can be completed in a short time.
Keeping the core algorithm doesn’t necessarily mean the end of tiktok’s U.S. operations, because software engineers can still reconstruct tiktok using user data as a basic training dataset, according to a technical expert familiar with the technology. But the process could take some time and could cause tiktok to lose its current competitive advantage, he said.
After the adjustment of the export catalogue, trump did not change his previous statement. On September 1, he confirmed to the media that if the transaction was not completed before September 20, he would close tiktok’s operation in the United States according to an administrative order.
According to Reuters news on September 2, tiktok has proposed four potential acquisition plans:
1. Although it can bypass China’s export control, it is a huge challenge for the buyer who must quickly come up with an alternative algorithm.
2. A transition period of up to one year will be negotiated with CFIUS, which oversees the transaction negotiations, but it is not clear whether the proposal still requires Chinese government approval.
3. Seeking China’s approval to transfer tiktok’s algorithm to its U.S. buyers, but this will amplify the geopolitical risks of the deal, given the deteriorating Sino US relationship on trade, cyber security and the new crown epidemic.
4. The fourth is to license the algorithm to tiktok’s buyer by byte skipping, rather than transferring it directly, but this may worry CFIUS, which hopes to clear the relationship between byte skipping and tiktok us.
Regardless of the result, byte skipping should be prepared for the next step. And this is also the challenge it is about to face: tiktok is the most important link in the globalization of byte hopping. Without it, what should we do next?
If we lose tiktok, what about the globalization of byte skipping?
In 2015, Zhang Yiming proposed that byte skipping should be globalized. In the past five years, tiktok has been sailing to major countries as described by Zhang Yiming. Among them, tiktok is the most important link in the globalization of byte leaping.
In terms of download volume, tiktok is already the largest mobile application with the largest increment in the world. In May Sensor Tower data showed that the total downloads of jitter and TikTok in tiktok App and GooglePlay exceeded 2 billion times. Over the past 7 months, tiktok and TikTok have increased 700 million users. Who can do this in the wake of traffic anxiety?
This speed of development has undoubtedly made tiktok a hot chicken in the past two years. It’s no wonder that Facebook, the largest social traffic portal in the United States, and Tencent in China all regard byte skipping and tiktok as the biggest “enemy”.
Moreover, affected by this year’s epidemic, the number of tiktok users in the United States has increased dramatically. According to previously published data, tiktok had about 11 million in the United States in January 2018, and by August 2020, tiktok’s monthly life in the United States exceeded 100 million. One in three Americans brushes tiktok at least once a month. More than 60% of American teenagers use tiktok at least once a month, compared with 36% and 41% on Facebook and twitter, according to a survey conducted by investment bank Piper Sandler in the first quarter of this year.
A master fund investor, in his communication with Chinanet, repeatedly lamented that he had never thought that byte hopping could do so well in the globalization of the content field. “The globalization of Alibaba and Tencent is not as good as byte. I think it will be many years before China can export soft power to the outside world (the investor thinks it has been realized now). It’s amazing. It’s very powerful. ”
He told tiktok that TikTok was too strong to catch human nature. Jitter, or TikTok, is the way to produce short videos in a localized way – and a short viral video tiktok, which affects the minds of users through soft power like Hollywood movies. What’s more, its global model is “smart,” hiring local people to operate in a local way.
There is no doubt that tiktok is a byte skipping business. But now tiktok is in a tough situation: India’s largest consumer market is still under ban, the most profitable US market has been “snatched”, and Australia, Canada and New Zealand, which have performed well, have been sold in packages.
The loss of Indian and American markets means tiktok has lost nearly half of its overseas customers. Not to mention now, six major markets have been lost in two months, and the successive heavy losses may also have shredded tiktok’s global map.
Is Zhang Yiming’s internationalization road based on five years’ premise “broken dream”? Besides tiktok, what other products can support Zhang Yiming’s globalization dream?
China investment network learned that at present, byte hopping has offices in 126 cities around the world, and its products have been exported to more than 150 markets around the world. Among the main business entities listed, tiktok has four overseas subsidiaries, namely, the American company responsible for the North American market, the Australian company for the Australian market, the Singapore company for the Southeast Asia and India market, and the British company responsible for the European business.
China investment network learned that byte beat through self-research and M & A in the overseas operation of more than 10 products.
The tiktok products include the overseas TopBuzz, TikTok, volcano, Vigo Video, Helo, Lark, and Resso.
In addition, bytecan also participated in and controlled the news streaming media, such as dailyhunt, babe, newsrepublic, flipagram, BBE, newsrepublic, etc Musical.ly , live broadcast platform Live.me Etc. Among them, topbuzz Musical.ly Due to the operation, merger and other reasons, the product has been shut down by byte skipping.
But in fact, in addition to tiktok, the other overseas product matrix of byte skipping is not smooth sailing. In addition to tiktok, two other Indian products, helo (Indian dialect content community) and Vigo video (overseas version of volcano video) also appear on the banned list.
Despite the “setback” of internationalization, in fact, byte leaping sticks to its original territory – quietly layout in the domestic market, and opens up a new battlefield in the subdivided fields that the giant fails to cover.
Globalization enters slow lane, byte quietly develops domestic business
Since this year, byte skipping has been mainly distributed in the field of games and education. At the time when most enterprises in the epidemic situation laid off staff, byte beat sent out olive branches at the beginning of the year to recruit thousands of people in the game and 10000 people in the field of education.
The game field is not hard to understand. As the “cow” of traffic and realization, it is the first choice of companies such as Alibaba whether it is byte hopping.
36 krypton reported that byte skipping game business can be roughly divided into mild leisure games and heavy self-developed games. Since the beginning of 2019, from the “eradication of virus”, “voice jump ball” to “my Kung Fu special cattle”, tiktok successfully verified the release and operation strategy of light games through the purchase of super traffic App and foreign channels, such as jitter, and so on, proving that word jumping game has the advantage of channel.
In the field of education, byte skipping is a long line layout. After Zhang Yiming emphasized education as the company’s new strategic direction in the internal letter in March this year, byte skipping has made frequent actions in this field.
In March and April this year, byte beat launched guaguagualong English and guaguagualong thinking successively, and purchased mathematical thinking products in August, and you took a picture. In addition, in June this year, the byte jumping announced the launch of the “wave plan”, which invested tens of millions of stream support platform educational creators through tiktok, jitter and watermelon video. It plans to build 5 tens of millions of fans online teachers and 550 million fans.
In addition, byte skipping also increases the reserve of educational talents. In May this year, a recruitment notice of the Qingbei online school under byteconbeat announced that it would provide excellent teachers with “an annual salary of 2 million, no ceiling”.
In addition to education and games, byte has actually increased its investment in medical knowledge and real estate sales in the past two months.
In addition to education and games, byte beat has accelerated the pace of trying other domestic vertical fields in the past month, including Beijing time flies Technology Co., Ltd., the main operator of the real estate trading platform “happy lane” in early August; and the acquisition of encyclopedia famous doctors by hundreds of millions of yuan in mid August, and adding medical content.
Now, the one month tiktok sale has been settled, and the byte jitter will be what happens next, we will wait and see.
And for China’s offshore enterprises, byte skipping is also a good warning. Dong Yizhi, a lawyer familiar with the law and capital market of the United States, once told China investment. Com: “the politicization of capital market issues is the trend now, which also rings an alarm for us. Now is not a good time node. It is too optimistic to blindly believe that the capital market is still in accordance with the established rules of the game. “