Why TikTok sale may run into hurdles
Technology transfer curbs and the rise of rival platforms could pose as major roadblocks in the way of TikTok India's acquisition, the Mint quoted two industry experts as saying. Earlier, it was reported that SoftBank, a minority stakeholder in TikTok's parent company ByteDance, has begun talks with potential partners to jointly bid for the India unit that was banned in June.
The report says that Chinese rules that prevent its companies from transferring technology to non-Chinese firms without Beijing's approval could hinder the way for its acquisition. "The sale of a company or product minus its core proposition greatly diminishes the value. The brand and customers still add up to a lot of value, but minus the core algorithm, it would attentuate the value and could be a dealbreaker for acquisition talks," Prasanto K. Roy, a public policy consultant told the Mint.
TikTok's worldwide success is often attributed to its content recommendation algorthim behind the 'For You' page, which fetches personalised content to every user. Siddharth Pai, the founder and managing partner of Siana Capital Management, wondered if it was a move to hold on to the algorithm or to hold on to data. "The question is not necessarily about where the algorithm resides. It is also about where the data generated using the algorithm is sitting. The algorithm, even if it is completely blackboxed, can be re-engineered from outside by studying the pattern of output. The question here is whether it is a move by China to hold on to the algorithm or to hold on to data," he said.
TikTok was estimated to be valued at $3 billion when India banned the app. The valuation and interest in its assets may diminish if the ban continues.
