TikTok, in its fight to stay in business, is seeking the nod of the British government to move its headquarters from the US to London. The ban speculations that had trailed its existence in the United States for months now are gradually materializing, and the short video app is looking for salvation.
The US president, Donald Trump signed an executive order last week, requiring TikTok’s parent company, ByteDance to sell the app to an American company or watch it get booted out of the US in 45 days.
A source familiar with the development said that TikTok has been waiting on the UK Prime Minister, Boris Johnson to wave them over.
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“TikTok has been sitting on the plan to relocate to London for weeks, pending a positive response from the government. If the government would not speak out in its favor, it would be very difficult for TikTok to make the move,” the source said.
In London, the decision to host TikTok rests not only on the desk of Johnson but also on those of his ministers. Last month, the United Kingdom announced it has banned Huawei from its 5G roll out. The decision has been based on national security concerns, spurred by pressure from the US and members of the UK parliament, even though it would cost the government more to use alternate companies for the 5G deployment.
But TikTok has come with a bait; $3.9 billion in investment proposal for the UK. While it is clear that the United Kingdom needs the investment, Johnson would need all his ministers to be on the same page to accept it.
After the Huawei ban, Johnson has called for cooperation with Beijing on other fronts, a stance portraying him as ‘free’ from Washington’s grip. But TikTok is facing a ban on the same security concern just as Huawei, which makes the situation difficult for London.
The US had threatened to stop intelligence sharing with the UK, if it continued to allow Huawei to lead its 5G roll out. A deal with TikTok may hurt Johnson’s relationship with Trump, and London doesn’t want to be seen as TikTok’s sympathizers in a time of faceoff with Washington.
Many British ministers are as wary of TikTok as they are of Huawei. SCMP reported that Oliver Dowden, the British secretary for digital, culture, media and sport, harbored reservations about the TikTok deal. Dowden has been critical of Chinese tech companies, and was frontal in the ban of Huawei. He has vowed to be “clear-eyed” about “high-risk” Chinese tech firms.
But while there have been uncertainties around the possibility of letting TikTok be headquartered in London, due to divisions among parliamentarians, the source said foreign office has been in support of the deal because the app is not considered a security risk under Britain’s national security assessment, according to SCMP.
Moreover, Microsoft’s attempt to buy TikTok in North America, New Zealand and Australia is ‘considered an attempt to drive a wedge between Britain and the rest of the Five Eyes security network.’
Spokesman for Johnson said the TikTok’s proposal “would be a commercial decision.”
TikTok has been desperately trying to get out of trouble relating to China and lately, the United States, by finding bases in Europe.
Last week, the app said it’s planning to build a $500 million data center in Ireland to store videos, messages and other data generated by European users. It will be its first data center outside the US and Singapore.
UK’s consent will be key in determining how TikTok proceeds with its situation in the United States. Though the app is planning a lawsuit against the Trump’s administration, Microsoft and Twitter are still bidding for a possible acquisition. While Microsoft is aiming to acquire the app’s operations in North America, New Zealand and Australia, Twitter is focused on its American operations only.
London would likely support Twitter as it would want to protect the Five Eye Security network from a potential US wedge. But considering the amount, though TikTok has not said how much the deal is but analysts put its value around $50 billion, Twitter is no match for Microsoft’s financial muscle.
Twitter’s valuation is around $30 billion, which is not enough to contend for TikTok’s US operations unless it will seek additional funding. Meanwhile, it’s a race against time for the short video app as the deadline for the acquisition will end on September 15.