Chinese social media giant ByteDance is reportedly in talks with Indian billionaire Mukesh Ambani's Reliance Industries Limited to sell TikTok's India business. Understandably, the move by ByteDance is in a bid to save its short-video making app's fate in its biggest market by users, which has taken a hit since the relationship between India and China soured in recent times.
The development assumes further significance given that tech giant Microsoft too is engaged in talks with ByteDance to buy a controlling stake in TikTok's global operations before the September 15 deadline set by President Donald Trump's administration. TikTok has been banned in India since the end of June due to border tensions between New Delhi and Beijing.
TikTok Looks up to Reliance
TikTok chief executive officer Kevin Mayer reportedly approached Reliance Industries last month to see if the oil-to-telecom conglomerate was interested in buying a stake in the company's India business. Since then there have been several rounds of talks but a deal is yet to be reached. According to sources, TikTok's business could fetch a valuation of around $2.5 to $5 billion, or about 10 percent of the reported $50 billion valuation globally for the entire firm.
Both BydeDance and Reliance declined to comment on the development. If Reliance finally buys a stake in TikTok, not only will it come as a big relief for ByteDance but also will save the jobs of thousands of employees with the company in India. An investment in TikTok can further help the oil-to-retail giant to make a deeper connection with consumers given that it already operates the telecom venture Jio Platforms. Jio Platforms has a broad presence in India with over 400 million users.
TikTok in Crisis
If Reliance buys a stake in TikTok's India business, both companies stand to gain. Reliance has been expanding its presence in the telecom sector aggressively and adding a social media app like TikTok will only bolster its position as a telecom giant. Since April this year, Reliance's digital venture has raised around $20 billion from 13 high-profile investors, including the likes of Facebook and Google. However, Reliance is likely to wait and let Tik-Tok's valuation drop further, and then decide strategically, rather than rescuing a Chinese brand at this stage.
India, on the other hand, is TikTok's largest market outside China, with more than 200 million registered users. Moreover, ByteDance employs over 2,000 people in India, whose jobs are now at stake following the ban on the app. Also, profits have come to a standstill since June 29, when the Indian government banned 58 Chinese apps including TikTok due to a faceoff between Beijing and New Delhi after more than 20 Indian troops were killed in a clash with Chinese soldiers.
BydeDance has been embroiled in controversy since the end of last year after Trump accused that Beijing may be using TikTok's data for spying. The short-video app since has been under pressure in the United States and several European countries. In fact, ByteDance is separately engaged in talks with Microsoft to sell its business in select markets, including the United States.