TikTok’s Chinese owner is poised to maintain roughly half the profits from the app’s US business — even after ceding majority ownership to US investors under a deal pushed by President Trump, in accordance with a report.
People accustomed to the talks told Bloomberg News that ByteDance would pocket each a licensing fee for TikTok’s prized algorithm and a profit share tied to its remaining equity stake within the US enterprise.
That may likely leave ByteDance with a complete of fifty% or more of TikTok US earnings once the sale is accomplished, in accordance with Bloomberg.
The arrangement may help explain the Trump team’s floated $14 billion valuation for the US unit — a number that fell sorely in need of analyst estimates of $35 billion to $40 billion.
The US-backed buying group is anticipated to incorporate Oracle Corp., Silver Lake Management and Abu Dhabi-based MGX, alongside existing investors. Collectively, they’d hold about 80% of TikTok US.
Sources told The Post that a few of the big US investors controlling the brand new US TikTok are currently investors in Bytedance who will probably be “rolling” their shares into the brand new entity to avoid a serious taxable event. Accordingly, the sources said it could be that US investors will account for a bit of the 50% of profits which are said to be going to Bytedance.
Nevertheless, under the draft plan the Chinese are also getting paid a fat licensing fee — about 20% of revenues generated through the “special sauce” suggestion algorithm that will probably be tweaked by Oracle to handle US security concerns.
At $20 billion in sales, for instance, that may amount to $4 billion for ByteDance, in accordance with a source — coming directly out of US TikTok’s revenue and thereby deflating its value. The Beijing-based company also would retain about 20% of profits on the remaining revenue through its ownership stake.
That didn’t stop some experts from raising questions on the rock-bottom valuation for US TikTok that got disclosed late Thursday.
Ashwin Binwani, founding father of Alpha Binwani Capital, told Bloomberg News that the proposal “may very well be probably the most undervalued tech acquisition of the last decade,” arguing the figure reflects only a third of TikTok’s true value.
The deal stays unresolved despite Trump’s insistence that he struck an understanding with Chinese President Xi Jinping during a call last week.
Chinese officials haven’t publicly confirmed any agreement, and the precise terms are still being negotiated.
Vice President JD Vance, who revealed the $14 billion price tag on Thursday, conceded that the final word purchase price will probably be determined by the investors.
The Biden administration had previously signed laws requiring ByteDance to divest TikTok US or face a nationwide ban. Trump has repeatedly prolonged the deadline while brokering talks with buyers, claiming support on the platform helped secure his 2024 election win.
The Post has sought comment from ByteDance, TikTok and the White House.
The Chinese embassy in Washington told Bloomberg News that the US “must provide an open, fair and non-discriminatory environment for Chinese investors.”
With the profit-sharing structure still in flux, analysts warn that US buyers may very well be paying bargain-basement prices for an app that dominates the short-video market and generates greater than $10 billion a 12 months in American revenue.
TikTok’s Chinese owner is poised to maintain roughly half the profits from the app’s US business — even after ceding majority ownership to US investors under a deal pushed by President Trump, in accordance with a report.
People accustomed to the talks told Bloomberg News that ByteDance would pocket each a licensing fee for TikTok’s prized algorithm and a profit share tied to its remaining equity stake within the US enterprise.
That may likely leave ByteDance with a complete of fifty% or more of TikTok US earnings once the sale is accomplished, in accordance with Bloomberg.
The arrangement may help explain the Trump team’s floated $14 billion valuation for the US unit — a number that fell sorely in need of analyst estimates of $35 billion to $40 billion.
The US-backed buying group is anticipated to incorporate Oracle Corp., Silver Lake Management and Abu Dhabi-based MGX, alongside existing investors. Collectively, they’d hold about 80% of TikTok US.
Sources told The Post that a few of the big US investors controlling the brand new US TikTok are currently investors in Bytedance who will probably be “rolling” their shares into the brand new entity to avoid a serious taxable event. Accordingly, the sources said it could be that US investors will account for a bit of the 50% of profits which are said to be going to Bytedance.
Nevertheless, under the draft plan the Chinese are also getting paid a fat licensing fee — about 20% of revenues generated through the “special sauce” suggestion algorithm that will probably be tweaked by Oracle to handle US security concerns.
At $20 billion in sales, for instance, that may amount to $4 billion for ByteDance, in accordance with a source — coming directly out of US TikTok’s revenue and thereby deflating its value. The Beijing-based company also would retain about 20% of profits on the remaining revenue through its ownership stake.
That didn’t stop some experts from raising questions on the rock-bottom valuation for US TikTok that got disclosed late Thursday.
Ashwin Binwani, founding father of Alpha Binwani Capital, told Bloomberg News that the proposal “may very well be probably the most undervalued tech acquisition of the last decade,” arguing the figure reflects only a third of TikTok’s true value.
The deal stays unresolved despite Trump’s insistence that he struck an understanding with Chinese President Xi Jinping during a call last week.
Chinese officials haven’t publicly confirmed any agreement, and the precise terms are still being negotiated.
Vice President JD Vance, who revealed the $14 billion price tag on Thursday, conceded that the final word purchase price will probably be determined by the investors.
The Biden administration had previously signed laws requiring ByteDance to divest TikTok US or face a nationwide ban. Trump has repeatedly prolonged the deadline while brokering talks with buyers, claiming support on the platform helped secure his 2024 election win.
The Post has sought comment from ByteDance, TikTok and the White House.
The Chinese embassy in Washington told Bloomberg News that the US “must provide an open, fair and non-discriminatory environment for Chinese investors.”
With the profit-sharing structure still in flux, analysts warn that US buyers may very well be paying bargain-basement prices for an app that dominates the short-video market and generates greater than $10 billion a 12 months in American revenue.
