Chinese authorities are evaluating the option of allowing billionaire Elon Musk’s social networking company X to acquire the operations of short video creation and sharing platform TikTok in the US in case the company cannot resist the US ban.

Beijing sees the option as a key bargaining chip in negotiations over tariffs and technology export controls with the incoming administration of President-elect Donald Trump.

Beijing is discussing plans to sell TikTok’s US operations to billionaire Elon Musk, the boss of social network X and electric car company Tesla. Photo: portalf5

Under a law passed by the US Congress last year, ByteDance (China), TikTok’s parent company, must sell TikTok US before January 19, or it will be banned in the US due to national security concerns.

In fact, this law does not ban the use of TikTok but will require technology corporations such as Apple and Google to stop providing this application through the app stores on mobile operating systems iOs and Android. This is no different from a ban because it will cause the TikTok application to decline over time.

TikTok is currently challenging the law by appealing to the US Supreme Court. However, in a hearing on January 10, the Supreme Court justices expressed their views that national security should take precedence over freedom of speech, signaling the possibility of a ruling requiring TikTok to comply with the law in the coming days.

In Beijing, senior officials have begun debating options for TikTok as part of broader discussions about how to work with the incoming Trump administration, according to people familiar with the matter. One option is to sell TikTok’s U.S. assets to billionaire Elon Musk, CEO of electric carmaker Tesla, which has a factory in Shanghai.

A potential deal with Musk, one of Trump’s closest allies, would appeal to the Chinese government, which is expected to have a say in whether TikTok is ultimately sold, the sources said.

Billionaire Elon Musk has spent more than $250 million to support Mr. Trump’s election campaign. So after winning the race to the White House, Mr. Trump announced that he would appoint Musk as co-leader of the government performance improvement board.

Under a plan discussed by Chinese government officials, Elon Musk’s social media company X (formerly Twitter) would take control of TikTok’s U.S. operations if the Supreme Court forces ByteDance to sell the platform. With more than 170 million users in the U.S., TikTok could boost X’s efforts to attract advertisers. Musk’s artificial intelligence company xAI could also benefit from the massive amounts of data generated by TikTok.

Chinese officials have yet to reach any firm consensus on how to proceed with the deal, and discussions remain preliminary. It’s also unclear whether Musk, TikTok, and ByteDance have held any talks on the terms of any potential deal. Musk has, however, expressed support for TikTok’s continued use in the United States.

In an article posted on the X platform in April 2024, he said: “In my opinion, TikTok should not be banned in the US, even though such a ban may benefit the X platform. Doing so would go against freedom of speech.”

Chinese officials will face tough negotiations with the incoming Trump administration over tariffs, technology export controls and other issues, and they see the TikTok talks as a key bargaining chip.

President-elect Trump has called on the Supreme Court to delay the TikTok ban so he can deal with it directly through negotiations after taking office.

Musk is in a position to influence US-China relations as the world’s richest man with operations in the world’s two largest economies. Tesla opened a massive electric vehicle factory in Shanghai in 2019 and has since expanded it into the company’s largest manufacturing facility. The effort has helped Tesla expand its market share in China despite fierce local competition and build goodwill with Chinese government officials.

Musk has spoken out against some recent US trade policies with China, including tariffs imposed by the Joe Biden administration on Chinese electric vehicles.

The discussions in Beijing suggest that TikTok US’s fate may no longer be solely under ByteDance’s control.

The Chinese government holds a so-called “golden stake” in a ByteDance affiliate, giving it influence over the company’s strategy and operations. TikTok has said Beijing’s control only applies to Douyin Information Service Co., another ByteDance subsidiary that operates the Douyin app (similar to TikTok) in China.

But Beijing’s export control rules prohibit Chinese companies from selling critical software algorithms abroad. The Chinese government would need to approve a deal that includes TikTok’s valuable content recommendation algorithm, so Beijing would have a significant say in any sale of TikTok in the US.

TikTok’s U.S. operations could be worth $40 billion to $50 billion, according to estimates from Bloomberg Intelligence analysts Mandeep Singh and Damian Reimertz. That’s a significant sum even for the world’s richest man, billionaire Elon Musk, who spent $44 billion to acquire Twitter in 2022 and is still paying off the massive debt he took on to make the deal happen.

Musk is admired by ByteDance employees in China, a source said, and is seen as a successful businessman with experience working with the Chinese government through Tesla.