TikTok is considering a split from its Chinese parent company if the US deal falls through

TikTok’s leadership is discussing the possibility of divesting itself from ByteDance, its Chinese parent company, to address concerns in the US about national security risks.

A divestiture that could result in a sale or IPO is viewed as a last resort, to be pursued only if the company’s existing proposal is not approved by national security officials, according to people familiar with the matter, who declined to do so when discussing non-public information.

Even then, the Chinese government would have to agree to such a transaction, according to the population.

According to Bloomberg Intelligence analysts Mandeep Singh and Damian Reimertz, TikTok’s U.S. business could be valued at $40 billion to $50 billion based on social media multipliers and other factors.

TikTok is under investigation for its Chinese ownership, which U.S. officials say could lead to Chinese tampering or espionage among Americans — a fear TikTok is working on. The company, which is undergoing a national security clearance by the United States Committee on Foreign Investments, last year agreed to implement a series of changes in a plan it’s calling Project Texas.

Loading

The proposal includes bringing in American tech giant Oracle to host US user data and auditing its software, and appointing a three-person government-approved oversight board. Many of the moves are already underway.

But Cfius, a body made up of several agencies involved in national security, has stalled in its review process, leaving TikTok unsure whether its plans will be enough to continue operating in the US, the people said. Members of the US Department of Justice committee were unwilling to accept TikTok’s proposal, according to others familiar with the matter.

“Neither a TikTok ban nor a sale of ByteDance’s TikTok will do anything to address national security concerns over data transfers,” said Brooke Oberwetter, a spokeswoman for TikTok. “Project Texas would keep TikTok data for our US users at a significantly higher standard of security than any comparable American company.”