As Chinese Internet giant ByteDance works on a sale of TikTok’s U.S. operations – and there are many ways the negotiations could go sideways.
The talks have moved slowly and a last-minute complication from Beijing sent stocks of the companies involved down on Monday on fears that China is trying to block the deal. The companies involved – Microsoft (MSFT), Oracle (ORCL), Walmart (WMT) – are also still jostling among themselves giving negotiators plenty to be concerned about.
But there’s one thing the companies might not have to worry too much about, at least according to Roger Zakheim at the Reagan Foundation: the U.S. presidential election.
“Would a TikTok ban in 45 days continue into a Biden administration?” Zakheim recently asked during an appearance on Yahoo Finance. “It very well could.” He said either administration would be likely to keep the pressure on to get the company into American hands.
A potential Biden administration could face two scenarios. Perhaps a company has made a deal and is still trying to work out what would undoubtedly be a complicated and fraught transaction. Or perhaps no deal has been reached and a Trump-imposed ban on the company would remain in effect.
Biden’s probable focus – like the Trump administration’s current approach – will “look probably to mitigate foreign ownership of Chinese companies in the United States,” Zakheim said.
‘Both say that they will address the China challenge’
Overall, many observers say that U.S.-China relations might not be all that different in 2021 under a Democratic or Republican administration.
“There's not an awful lot of difference between Donald Trump and Joe Biden on trade with China,” Edward Alden of the Council in Foreign Relations told Yahoo Finance recently.
Alden sees a convergence between the two parties toward a more confrontational stance on China, in both economic and national security spheres.
Zakheim said Biden would look for areas of cooperation, but both parties are thinking a lot about the same goal: a “decoupling” with Chinese companies. They agree on the goal but “both say that they will address the China challenge and competition threat in a better way.”
Prior to becoming a director at the Ronald Reagan Presidential Foundation and Institute, Zakheim worked in the government affairs group at Covington & Burling LLP, a prominent DC law firm. Before that, he worked on Capitol Hill in the U.S. House Armed Services Committee managing the passage of the annual National Defense Authorization Act (NDAA).
On Capitol Hill, there is a bipartisan bill to take on Chinese companies listed on U.S. exchanges. The legislation would require companies to submit to a range of stringent provisions. If they don’t comply, they would be delisted.
A looming Sept. 15 deadline
President Trump has promised to ban the app in the United States on Sept. 15 if no deal is reached. Trump has also – to the confusion of many experts – said the U.S. should get a cut of any deal. "The United States should get a very large percentage,” he said, “because we're making it possible.”
Biden does not appear to have commented on the TikTok negotiations specifically. His presidential campaign doesn’t have an official presence on the app and recently told staffers to delete TikTok from their phones. TikTok has about 50 million daily active U.S. users.
Overall, Zackheim said both parties will be motivated to push until the app is controlled by a U.S. company. “Concern about Chinese ownership of companies that do business in the United States that have access to huge amounts of data is really nothing new,” he said. “What's new is that this particular company is one that has an app that many of our children are using on a daily basis.”
Ben Werschkul is a producer for Yahoo Finance in Washington, D.C.