Netflix is the latest name to be linked with TikTok. The popular short-form video-sharing app reportedly reached out to the streaming giant for a possible acquisition deal of its US arm. However, Netflix is said to have shown no interest in acquiring the Chinese app.
ByteDance, the Chinese parent of TikTok, is under pressure to sell off its US operations following an executive order from the American government. Since July, the Trump administration has issued two separate executive orders giving the company until mid-November to find an American buyer or face a nationwide ban.
Industry estimates value TikTok's US arm at anywhere between $10 billion and $50 billion. This lofty price tag means not many American companies can afford or are willing to buy it. Let alone the regulatory hurdles that will come along.
Netflix is one of those very few American companies that can afford to buy TikTok. Interestingly, Netflix CEO Reed Hastings had earlier this year called TikTok "a competitor" in internet entertainment. So acquiring the popular app may have been beneficial for the streaming giant. However, the company has never commented on the matter.
TikTok approaches Netflix for a deal
After a ban in India on security grounds, TikTok is now facing a similar fate in the US. While the Indian government didn't give it a chance at survival, the company can still save its business in the US if it manages to sell off its operations in the country to a local company.
A few companies, including Microsoft, Twitter, and Oracle, are showing interest in acquiring the US arm of TikTok. Oracle's interest attracted verbal support from President Trump as well, but that's about it. Even Alphabet, Google's parent company, reportedly considered investing in the company but the plans didn't materialize.
Microsoft, meanwhile, has publicly announced its interest and has reportedly signed a "nonbinding letter of intent" as well. This is a sign that talks between the two companies have advanced, but a deal is seemingly far from done. Along with the US, Microsoft wants to takeover TikTok's operations in Canada, New Zealand, and Australia as well.
While speculations continue to mount, TikTok is trying to buy itself more time by filing a legal challenge against the Trump administration's executive order. The company accuses that the move is political and has nothing to do with national security.
The uncertainty that whether TikTok will be able to operate in the US in three months of time gives companies an opportunity to offer lower valuations. And this is possibly why TikTok is knocking doors of the likes of Netflix, in order to bring in more players and create a competition among potential buyers. It hopes doing this will increase the company's valuation. However, TikTok is racing against time here. It may have to settle for a far less sum for its US arm than it'd hoped for.