Twitter has reportedly emerged as another suitor for the U.S. operations of TikTok, though it is unclear if the social media company will be able to outbid Microsoft.
Twitter has held preliminary talks for a possible combination with TikTok, the Wall Street Journal reported, citing sources familiar with the matter.
However, the sources said Twitter will need to raise additional capital if it is to pursue the deal, as its market capitalization of about $29 billion is almost the same as the value of TikTok’s assets that were ordered to be divested by President Donald Trump.
“Twitter will have a hard time putting together enough financing to acquire even the U.S. operations of TikTok. It doesn’t have enough borrowing capacity,” said University of Michigan professor Erik Gordon.
Trump, due to security concerns over Chinese-owned parent company ByteDance, will force TikTok to sell to a U.S. company by September 15. Microsoft, however, with its $1.6 trillion market cap remains the front-runner, recently confirming that it will “move quickly” in its talks with ByteDance to acquire TikTok.
The terms of a TikTok takeover by Twitter are unknown, but the company believes that it will not face the same level of antitrust scrutiny as Microsoft and other bidders due to its smaller size, the sources said.
Digital Trends has reached out to TikTok for comments on the reported talks with Twitter, and we will update this article as soon as we hear back.
Trump signs executive order to ban TikTok
President Donald Trump recently signed an executive order that will ban U.S. business transactions with ByteDance starting September 20 to protect the United States’ national security.
TikTok threatened legal action against the executive order, claiming that it undermines the rule of law and prohibits opens markets. The lawsuit may reportedly be filed as early as Tuesday in the U.S. District Court for the Southern District of California.