Daniel Ives, a Managing Director and Senior Equity Research Analyst covering the Technology sector at Wedbush Securities spoke to CGTN Europe and broke down the complexities in terms of trying to ban Tik Tok.
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00:00 US TikTok users, many of whom have made their careers online,
00:05 have already been complaining about these moves to ban the platform by congressional lawmakers.
00:09 And they've been sharing their fury online.
00:12 I have been screaming for so long about the TikTok ban that I am out of screams.
00:17 This is me actually angry.
00:21 I also think they failed to realize the consequences of banning this app
00:27 because at first glance, yeah, it's just a dancing app.
00:30 But people have built businesses on here. Millions of businesses.
00:34 This is like the first place that I have felt like I could just be myself,
00:39 my like weird self. And, you know, people would actually be like,
00:44 oh, that guy is not terrible to listen to.
00:47 That a bunch of expired retirement home patients all gathered in a room can never agree.
00:53 But when it comes to banning the renegade app is the one time that they decide to like unite forces and come together.
01:01 You know, when the homelessness rates are going up, people can't even freaking feed their kids.
01:06 The government's just like, OK, maybe later. But when it comes to TikTok, are you kidding me?
01:13 Despite the protest on TikTok, as we can see just now, after being passed by the lower house of the US Congress,
01:19 the proposed TikTok legislation is now heading to the Senate.
01:23 But Dan Ives, managing director and senior tech analyst at RedBush Security, says chances that it will be approved there are low.
01:31 We believe only a 25 percent chance this app's even get to the Senate floor.
01:37 It's a third rail issue. And I think there's a lot of complexity in terms of trying to ban TikTok.
01:45 And the sale that we believe is almost impossible because China and by then will not part with the algorithm and source code.
01:55 So if it happens, if it gets to the green light, who do you think are likely to be the potential buyers?
02:02 Look, in the least likely that it actually gets signed and gets the Biden's desk, it would have to be a strategic buyer.
02:09 Likely an Oracle, a Microsoft would be the most, I think, top of the list.
02:15 Now, of course, Mnuchin and others, you'll have consortiums that would line up.
02:20 There will be a long list of potential buyers. But we believe ultimately if this got sold, it would be a big tech player.
02:28 And Beijing has repeatedly said that it wouldn't allow Washington to force a sale of TikTok.
02:36 And in August 2020, it unveils new reports, exports controls governing algorithms such as the one that powers TikTok.
02:43 So do you think if the potential buyers don't get the algorithms of TikTok, are they still willing to buy TikTok?
02:52 But we think the valuation of TikTok is 100 billion for the US operations without the source code, 30 to 40 billion.
03:02 Source code is the key. This is buying a F1 race car without the engine.
03:08 And that's the issue. And Beijing and Biden's will never part with that source code.
03:14 And if it doesn't happen, are there alternatives like strengthening oversight of the company?
03:21 Look, right now, there's still a CFIUS review in terms of the worries about a backdoor to Beijing.
03:28 I still believe Oracle plays a big role. Project taxes, making sure they're in charge of the data.
03:35 I think we'll get to some happy medium here where TikTok stays in the US, is not sold.
03:41 And we continue to believe a 25% chance that a ban actually happens.