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ByteDance’s Need for a TikTok-Oracle Deal: China is Slowing

TikTok’s Chinese owner has fought tooth and nail to keep control over its wildly popular platform for dancing teens and young Los Angeles influencers. One big reason: The days of fast internet fortunes and meteoric digital growth in its home market may be coming to an end.

With Microsoft dropping out of the race to take over TikTok in the United States, Oracle has emerged as the leading contender to save the video app from impending restrictions from the Trump administration. TikTok’s parent company, ByteDance, has chosen the software giant to be its U.S. technology partner, an arrangement that would most likely give Oracle oversight over data on American users.

Speaking on CNBC Monday morning, Treasury Secretary Steven Mnuchin said that government officials would review the proposal by ByteDance and Oracle this week, and then make a recommendation to President Trump. Mr. Mnuchin did not make clear whether Oracle would also buy a majority share in TikTok’s U.S. operations as part of the proposed deal. Mr. Trump had pressed for new ownership of the app as a way to address concerns about potential data gathering by the Chinese government.

Deal talks had been held up after China signaled last month that it would bar TikTok’s technology from being transferred overseas. A partnership with Oracle would probably be more palatable to Beijing, which requires many foreign companies to work with local counterparts to do business in China.

For ByteDance’s founder, Zhang Yiming, the deal could determine whether his eight-year-old company becomes a globe-straddling digital colossus or is reduced to a mere power player in China, where the internet market is maturing and competition is becoming more intense.

Over the past decade, the confluence of engineering talent and commercial opportunity in China minted fortunes that only Silicon Valley’s matched. The country is still a huge market with plenty of spending power, but its economic growth has slowed. Its population of internet users, at 900 million in a country of 1.4 billion, is reaching natural limits. Ninety-nine percent of those people have smartphones on which they already spend pretty much their entire waking lives.

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Credit…Rozette Rago for The New York Times

“For the entire Chinese internet market, there is much less room than there used to be to increase the amount of time spent by users,” said Zhang Xueru, an analyst in Shanghai with 86Research. “Growth in the digital ad market is much slower than before.”

ByteDance declined to comment.

Mr. Zhang of ByteDance believed early on that only by having an international presence could his company compete on the level of Google, Facebook or Amazon. As ByteDance grew, he encouraged employees to adopt what he called a “Martian” perspective on business. He wanted them to think of ByteDance not as a Chinese company gone global, but as an inherently planetwide enterprise, free of national starting points or biases.

Growing wariness toward China’s technological advancements has made that vision look harder to sustain, though. Never before has the United States clamped down on a Chinese company with as much cultural cachet as ByteDance. India banned TikTok in June, also on national security grounds. More European governments are shying away from using Chinese telecommunications equipment, fearful of espionage.

ByteDance’s rivals in China began discovering long ago how hard overseas expansion could be.

The internet giant Tencent is a global heavy hitter in video games through its holdings of developers including Epic Games and Riot Games. It has mostly failed, however, to export its best-known product: WeChat, the company’s Swiss Army knife of an app, which the Trump administration is also threatening to curb. India recently banned the mobile version of the shooter game PlayerUnknown’s Battlegrounds, which Tencent distributes in the country.

China’s other internet behemoth, the e-commerce giant Alibaba, still makes more than 90 percent of its revenue at home despite years of investment in overseas marketplaces. Two of China’s newest tech titans — the shopping site Pinduoduo and the food delivery platform Meituan — are focused heavily on the domestic market.

“Tencent’s businesses are diversified with multiple revenue streams that we expect to generate sustained growth in the years ahead,” the company said in an emailed statement. “The China market continues to offer tremendous opportunities,” the statement said, adding that the company would continue to explore overseas expansion.

Alibaba declined to comment.

ByteDance is hardly a minnow in China. There, TikTok’s sibling app, Douyin, is beloved by advertisers and also helps carry the Communist Party’s propaganda messages. ByteDance now accounts for around one-fifth of online advertising revenue in China, a larger share than Tencent and the search engine Baidu, according to the research firm Bernstein. The country’s online ad market was worth $95 billion last year, according to iResearch.

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Credit…Thomas Suen/Reuters

Grabbing a bigger slice of the pie won’t be easy, even if ByteDance has for years been assembling an armada of other apps aimed at conquering more of China’s two-plus billion eyeballs.

Besides Douyin, it runs two other video apps, Xigua and Huoshan. Its news aggregator, Jinri Toutiao, was its first blockbuster in China and remains a major platform. It is building up its video game and music divisions. It has an e-book app, shopping apps, online learning services, a car buying site, a cloud services platform and an office productivity suite.

“ByteDance has always been very, very enamored with Amazon,” said Rui Ma, an investor and China tech analyst. It and other Chinese internet companies respect “the fact that Amazon can dominate in multiple things,” she said. “It’s also helped by the fact that Jeff Bezos is the richest man on earth.”

In China, ByteDance could still try to use Douyin, which has an estimated 300 million daily users, to herd more people toward its other products — those education apps, for instance.

“Their core user demographic spends eight to 12 hours a day on education, and there are not many large competitors with internet-first business models,” said Turner Novak, a general partner at Gelt Venture Capital who has studied ByteDance’s rise.

Video game companies are big advertisers on Douyin and TikTok, Mr. Novak noted, which suggests that ByteDance could make lots of money by advertising its own games on those platforms as well.

Conquering online retail might be trickier. ByteDance is already trying to turn Douyin into a mobile-age Home Shopping Network, a place where kindly looking people entrance viewers into buying things. Not everyone is convinced.

“E-commerce is not only about traffic,” said Shawn Yang, an analyst in Shenzhen with the investment bank Blue Lotus Capital Advisors. “E-commerce is also about service, about product quality, about logistics, payments. The whole process is very long, which means that it’s not as easy as online gaming or advertising.”

Even serving up videos that are longer than the bite-size ones that fill Douyin and TikTok might require more of ByteDance than an algorithm that intuits viewers’ tastes with uncanny accuracy.

“Netflix used to say that its recommendation technology was a core asset,” said Ms. Zhang of 86Research. “But in fact, long-form video platforms still need hits. The platforms need big shows to bring in users. So actually, recommendation technology isn’t especially important compared to content.”

For now, ByteDance may find the most success building upon what it already knows best. One path might be to use brief, punchy videos as a medium not just for entertainment, but for learning or even hiring and dating.

Eugene Wei, a tech executive and angel investor in San Francisco, has argued that short videos are uniquely suited to a recommendation engine like TikTok’s. Unlike news articles such as this one, TikTok’s user-made videos are easy to create and easy to consume, so people generate huge quantities of data about their tastes simply by using the app. ByteDance runs the data back into its systems to improve its recommendations, which keep people even more glued to the app.

The result, in Mr. Wei’s words: “a rapid, hyper-efficient matchmaker” akin to the magic Sorting Hat in “Harry Potter.”

“You need some creativity to adapt short video” to new business areas, Mr. Wei acknowledged in an interview. “But the fact that ByteDance already walked that path once means you just believe it more the next time around.”

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Walmart Joining Microsoft in TikTok Bid

SAN FRANCISCO — The race to buy TikTok took another turn on Thursday when Walmart said it was teaming up with Microsoft on a potential bid for the popular Chinese-owned video app.

The discussions are ongoing and other suitors for TikTok are involved, said two people close to the deal talks, who were not authorized to speak publicly. It is unclear which companies will ultimately secure a deal, though TikTok will likely make a decision in the coming days, they said.

In a statement, Walmart said, “We are confident that a Walmart and Microsoft partnership would meet both the expectations of U.S. TikTok users while satisfying the concerns of U.S. government regulators.”

TikTok declined to comment and Microsoft did not immediately respond to a request for comment. CNBC earlier reported Walmart’s participation.

TikTok, which is owned by the Chinese internet company ByteDance, has been under pressure from the Trump administration, which has become increasingly tough on China. White House officials have said that TikTok poses a national security threat because it could provide data about U.S. users to Beijing. This month, President Trump signed an executive order mandating that TikTok sell its U.S. operations by mid-September or cease transactions within the country.

That has pushed ByteDance and TikTok to seek a buyer, in what could amount to a blockbuster deal. Microsoft has been talking with TikTok and ByteDance for weeks about a potential acquisition, people with knowledge of the talks have said. They initially discussed Microsoft taking just a minority stake in TikTok, before the scope of a deal ballooned.

Since then, the enterprise software maker Oracle, along with other bidders, have also joined the talks.

Prices for a potential deal have ranged from $20 billion to $50 billion, the people with knowledge of the talks have said. But discussions are fluid and the situation has been shifting quickly.

Microsoft, with $137 billion in cash and a market value of more than $1.7 trillion, is far larger than other potential acquirers and has the deepest resources.

Dan Ives, an analyst at Wedbush Securities, said in a note to investors that the participation of Walmart was likely “the final piece of the puzzle that ultimately cements Microsoft successfully acquiring TikTok’s U.S. operations for likely $35 billion to $40 billion.”

Late on Wednesday, Kevin Mayer, TikTok’s chief executive, said he was resigning from the company because he had signed on for a global role. He alluded to how the app’s global structure would likely change given all the political criticism. In a note to employees, he also indicated that a deal for TikTok might be close.

“We expect to reach a resolution very soon,” Mr. Mayer wrote.

Zhang Yiming, ByteDance’s chief executive, said in his own note that ByteDance and TikTok were moving swiftly to resolve its issues in the United States and India, where the app was banned in June.

“I cannot get into details at this point, but I can assure you that we are developing solutions that will be in the interest of users, creators, partners and employees,” Mr. Zhang said.

While Walmart has its roots in brick-and-mortar stores, the world’s largest retailer has been pushing into digital businesses, partly as a way to outpace its rival Amazon. And that means expanding into areas like entertainment.

In 2018, the retailer reached a deal to have Metro-Goldwyn-Mayer create short-form original series for Walmart’s ad-supported streaming service, Vudu. At the time, Walmart said it expected to partner with more studios to create content for the service.

It also entered a joint venture with Eko, a New York start-up that focuses on “interactive storytelling,” in which viewers control the plot of commercials and television episodes.

Vudu features so-called shoppable ads, in which viewers watching on internet-connected TVs can click on the words “add to cart” on an ad and have the product being advertised dropped into their Walmart.com shopping queue.

The pandemic has shown the importance of e-commerce to Walmart and other big-box retailers. In an earnings report earlier this month, Walmart said its online sales doubled during the quarter.

Connor Ennis and Michael Corkery contributed reporting.

This is a developing story. Check back for updates.

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How TikTok’s Talks With Microsoft Turned Into a Soap Opera

SAN FRANCISCO — When Microsoft began talking this summer with the popular video app TikTok and its Chinese parent company, ByteDance, no one had any intentions of pursuing a blockbuster deal.

With tensions swirling between the United States and China, along with the complexities of running a social media company, any large acquisition appeared too treacherous to navigate. So Microsoft discussed taking a small stake in TikTok and becoming one of the app’s minority investors, said four people briefed on the conversations.

Even a small deal would be a win-win, the thinking went.

For Microsoft, a minority investment would potentially bring TikTok over to using its Azure cloud computing service, immediately making the app one of Microsoft’s biggest cloud clients, said the people, who declined to be identified because the details are confidential. (TikTok has been using Google’s cloud computing services to power its videos.)

For ByteDance and TikTok, a deal with Microsoft could help propel the valuation of the app’s business outside China to as high as $80 billion, the people said. It would also provide TikTok with the endorsement of a blue-chip American company to mollify the Trump administration, which had called TikTok’s Chinese ties a national security threat.

Yet what started as discussions about a small investment morphed into a big, messy, political soap opera. Pushed by President Trump, who has ordered TikTok’s U.S. operations to be sold or to cease operating, ByteDance is now discussing selling parts of TikTok’s global operations to several potential bidders. And with so many groups jumping into the talks to get a piece of any deal, all are trying to drive their own interests and agendas.

Apart from Microsoft, the bidders include Oracle, the enterprise software company, the people with knowledge of the talks said. Bankers and investors, some authorized and some simply trying to gin up a deal, have also called Netflix and Twitter about buying TikTok, they said, though it is unclear if those companies have a genuine interest in an acquisition. Microsoft, with the deepest resources and a market value of more than $1.6 trillion, still appears the furthest along for now, the people said.

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Credit…Shannon Stapleton/Reuters

The sale scenarios on the table are head-spinning, the people said, because all of the parties — ByteDance, TikTok, their investors, and the bidders — want to get the most out of any deal. The talks have covered everything from selling just TikTok’s North American operations all the way to every part of TikTok, minus ByteDance’s Chinese-only video app Douyin, they said.

A deal price is unclear, though numbers have ranged from $20 billion to $50 billion depending on what parts of TikTok will be sold, the people said. The talks are fluid and no deal may ultimately be reached.

Even if one does take place, a TikTok sale — which has become a referendum on the U.S.-China relationship — may still be disrupted if Beijing or Mr. Trump weigh in. Mr. Trump has been highly involved, including talking to Microsoft’s chief executive, Satya Nadella, and saying that Oracle could handle buying TikTok. In an Aug. 6 executive order, he imposed a deadline for TikTok’s U.S. operations to be sold by Sept. 15.

On Monday, TikTok sued the U.S. government, arguing that the executive order had deprived it of due process. The suit could give TikTok more time to operate in the United States if the courts order it, a stalling tactic that may help the app wait it out past the Nov. 3 election.

Steven Davidoff Solomon, a law professor at the University of California in Berkeley, who contributes to The New York Times, said the United States’ forcing such a huge company to sell itself was “really unprecedented.” He added, “This is a forced sale, and ByteDance is trying to keep it from being as much of a fire sale as possible.”

This account of TikTok’s deal discussions was based on interviews with more than a dozen people who were involved in or were briefed on the situation. They spoke on condition of anonymity because they were not authorized to speak publicly.

Representatives from TikTok and ByteDance, Microsoft, Netflix, Twitter, Oracle and the White House declined to comment.

A spokesman for China’s Foreign Ministry, Wang Wenbin, called Mr. Trump’s executive order a “naked act of bullying,” and added that the U.S. government would eventually “reap what it sows.”

TikTok, which ByteDance created partly out of a $1 billion purchase of the lip-syncing app Musical.ly in 2017, has become a phenomenon in the United States and elsewhere. More than 100 million Americans regularly use the app, the company has said, especially teenagers and twentysomethings.

Last year, as tensions between the United States and China grew worse, the Trump administration began scrutinizing TikTok and ByteDance. In November, the Committee on Foreign Investment in the United States, a powerful panel known as Cfius that reviews foreign acquisitions, opened an inquiry into ByteDance’s deal to buy Musical.ly after lawmakers voiced concerns that TikTok was giving data on its American users to Beijing.

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Credit…Jeenah Moon for The New York Times

TikTok has denied that it helps Beijing. To reduce the U.S. pressure, Zhang Yiming, ByteDance’s chief executive, began consulting with a small group of investors in his internet company, including Sequoia Capital and General Atlantic. ByteDance, which is privately held, has been valued at about $100 billion.

Doug Leone, one of Sequoia’s partners, and Bill Ford, chief executive of General Atlantic, became Mr. Zhang’s bridge to the White House, the people with knowledge of the talks said. In their conversations, the Trump administration had specific stipulations: First, it wanted TikTok to overhaul its governance and shareholder structure to reduce ByteDance’s ownership of the app. Second, it wanted guarantees that TikTok’s American user data be stored on U.S. servers.

The firms needed a major U.S. tech partner to get the deal done, the people close to the talks said. Mr. Zhang and the investors figured that Facebook, Google and Amazon were under too much antitrust scrutiny. But Microsoft, with its cash hoard of $137 billion, cloud expertise and strong government relationships, could work.

Mr. Zhang, a former Microsoft engineer, reached out to Microsoft executives to gauge their interest, said one person with knowledge of the talks. Sequoia and General Atlantic declined to comment.

By July, Microsoft joined the talks. At the time, the discussions centered on Microsoft making a minority investment in TikTok, the people said. Between the U.S.-China tensions and the pressures of operating a social media company, Microsoft executives were hesitant about a big deal, said people briefed on the conversations. ByteDance and Mr. Zhang also wanted to retain some ownership of TikTok, they said.

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Credit…Doug Mills/The New York Times

Yet as the talks progressed, Microsoft grew warmer on a potentially larger deal with TikTok. While Microsoft has lots of data about industries like gaming and workplace software, it has little information about people’s social media behavior. TikTok’s user interaction information could strengthen Microsoft’s data science operation, the people briefed on the talks said.

TikTok could also be linked to Microsoft’s $7 billion advertising business. Together, that could make a meaningful difference to Microsoft’s growth, they said.

ByteDance and Microsoft came to see an acquisition of TikTok’s U.S. operations as a cleaner option, they added. Microsoft could allow TikTok to operate as a stand-alone unit, similar to how it had treated past large acquisitions, such as its $2.5 billion acquisition of the company behind the video game Minecraft in 2014 and its $26 billion purchase of professional networking site LinkedIn in 2016.

All the while, Trump administration officials were keeping an eye on the situation. Last month, Treasury Secretary Steven Mnuchin, who is chairman of Cfius and holds the final word on the panel’s recommendations of ByteDance’s purchase of Musical.ly, spoke with TikTok and Microsoft about how TikTok’s data should be on U.S. servers, three of the people said.

On July 31, Mr. Mnuchin presented the Cfius analysis of the ByteDance-Musical.ly deal to Mr. Trump, two people said. The recommendation: that ByteDance be ordered to sell TikTok to an American owner, with Microsoft acquiring most of TikTok’s business and the stakes held by ByteDance’s Chinese shareholders winnowed to a minority investment.

A spokesman for the Treasury and Mr. Mnuchin declined to comment.

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Credit…Ian C. Bates for The New York Times

But aboard Air Force One later that day, President Trump said he planned to ban TikTok entirely. Several of Mr. Trump’s advisers were furious at the derailment of their recommendation, saying that China hawks like Peter Navarro, the White House director of trade and manufacturing policy, had exerted too much influence, according to White House officials and others close to the president.

In a statement, Mr. Navarro said, “Nobody exerts ‘influence’ over President Donald J. Trump. He listens carefully to a wide range of often sharply competing views and then he makes the best and most informed decision. That’s why he is such a great president.”

The next 72 hours were chaotic. News leaked that Microsoft was in talks to acquire TikTok. Private equity firms and bankers circled. That briefly included Stephen A. Schwarzman, chief executive of the Blackstone Group, said people familiar with the talks. Blackstone declined to comment.

That weekend, Mr. Trump called Mr. Nadella about TikTok. Mr. Trump said ByteDance had 45 days to complete a sale of TikTok’s business in the United States. He added that any deal should help the U.S. government in some way, perhaps in the form of job creation or other economic benefits, or some kind of offering to the Treasury Department.

Privately, officials at Microsoft and TikTok were shocked. The 45-day window put TikTok at a disadvantage in negotiating the best deal. Mr. Trump also seemed to be arguing for “tipping the waiter,” essentially offering a percentage of the deal to the Treasury, the people said.

On Aug. 2, Microsoft issued a statement about its pursuit of TikTok and said it would provide “proper economic benefits to the United States, including the United States Treasury.” It did not elaborate on what that meant.

A few days later, Mr. Trump signed his executive order to block TikTok if it was not sold by mid-September. A week later, he issued another executive order giving ByteDance 90 days to close such a deal.

Since then, other potential suitors have emerged, including Oracle. ByteDance, backed into a corner by the White House, wants the best price for TikTok — and not only from one bidder in Microsoft. And sensing ByteDance’s weakness, more potential acquirers are kicking the tires on the hot, fast-growing app. All of that may turn off Microsoft from a purchase.

Even as deal discussions have continued, TikTok sued the U.S. government on Monday over Mr. Trump’s executive order.

“We far prefer constructive dialogue over litigation,” the company said in a statement. But given the executive order, it said, “we simply have no choice.”

Mike Isaac reported from San Francisco, and Andrew Ross Sorkin from New York. Reporting was contributed by Ana Swanson, Maggie Haberman, Michael J. de la Merced, Raymond Zhong and Alan Rappeport.

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With TikTok Mired in Uncertainty, Facebook Pounces With Instagram Reels

SAN FRANCISCO — As the Chinese-owned video app TikTok works to head off the threat of a ban in the United States, Facebook has sensed opportunity.

On Wednesday, Instagram, the photo-sharing app owned by Facebook, released Reels. Just like TikTok, people can use Reels to create 15-second videos that are designed to be easily shareable. And just like TikTok, Reels allows users to sync up their video recordings with clips of music or audio files that they record themselves, while adding other effects, like augmented reality filters.

The timing of the release couldn’t be more on the nose. TikTok has been struggling through a geopolitical morass with President Trump. The White House, which has said TikTok is a national security threat because of its ownership by the Chinese internet company ByteDance, has said the app must sell its U.S. business within 45 days or face a ban.

Reels will be available widely starting Wednesday in more than 50 countries, including the United States, Britain and Japan. It will also be featured in India, one of Facebook’s key growth areas. In June, TikTok was banned in India as part of a crackdown on many Chinese apps.

“TikTok is doing big things in this format, as have apps and features like Snap, YouTube and others,” Instagram said in a statement. It added that it had also seen the rise of short-videos on its service. “No two services are the same and this responsiveness to consumer demand is competition at work and one of the longtime hallmarks of the tech sector,” it said. “It increases choice, which is good for people.”

TikTok declined to comment.

Facebook has a history of cloning features or apps from its competitors. Mark Zuckerberg, chief executive of Facebook, rolled out a product called Stories for Instagram and Facebook in 2016 and 2017, respectively, as a response to the rise of the app Snapchat. Stories was a near-exact copy of Snapchat’s Stories, which let people chronicle their days and can be set to disappear.

Facebook’s move dented Snapchat’s growth, according to documents that Snap, Snapchat’s parent company, filed for its initial public offering in 2017. Evan Spiegel, Snapchat’s founder, has expressed frustration at Facebook’s willingness to copy its competitors.

In a memo to employees this week, executives at TikTok’s parent company criticized Facebook. Zhang Yiming, chief executive of ByteDance, said that he wished to expand as a global company but that TikTok faced an “intense international political environment, the collision and conflict of different cultures, and the plagiarism and smear of competitor Facebook.” Mr. Zhang noted the “complex and unimaginable difficulties” his company has faced over the past year, and that it has only grown worse under the “unfair” treatment from the Trump administration.

In a congressional hearing last month with other tech chief executives, Mr. Zuckerberg pointed to China and products like TikTok as innovation that the United States should be worried about, and that TikTok’s ascendancy was grounds to avoid unduly harsh regulation against American companies.

TikTok has long been in Facebook’s sights. As TikTok grew rapidly over the past few years in the United States and elsewhere, Facebook also rolled out Lasso, another clone of TikTok, in 2018. But Lasso did not catch on with audiences and Facebook shut it down in July.

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How TikTok’s Owner Tried, and Failed, to Cross the U.S.-China Divide

The Chinese entrepreneur behind TikTok took ample precautions when he set out to straddle the tech world’s most treacherous divide: the one separating China’s tightly controlled internet from the rest of the planet.

He made TikTok unavailable in China so the video app’s users wouldn’t be subject to the Communist Party’s censorship requirements. He stored user data in Virginia and Singapore. He hired managers in the United States to run the app and lobbyists in Washington to fight for it on Capitol Hill.

None of that counted for much in the end. With TikTok now negotiating a sale to Microsoft under intense pressure from President Trump, the digital wall between China and the United States is proving to be higher than ever at this moment of widening conflict between the two countries.

Only this time, it is the U.S. government, not China’s, putting up the barricades — an escalation that could foretell an even more restrictive time ahead for companies in both countries.

ByteDance, the eight-year-old Chinese social media giant behind TikTok, is China’s first truly global internet success story. The company’s founder, Zhang Yiming, 37, began pushing to expand overseas early in its existence, believing that only a company with worldwide reach could remain on the technological bleeding edge.

But TikTok ended up resonating with American teenagers at a time when even a platform for short viral videos is subject to political scrutiny. Under China’s leader, Xi Jinping, the Communist Party has emphasized its ultimate authority over Chinese people and businesses. Suspicion never dissipated that TikTok — no matter how many non-Chinese executives it put in charge — might be unable to withstand pressure from Beijing to surrender user data or manipulate content.

Similar doubts already hang over many other Chinese tech companies. TikTok’s sudden change of fortune could force them to re-evaluate their own international ambitions.

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Credit…Shannon Stapleton/Reuters

Chibo Tang, a partner in Hong Kong at the venture capital firm Gobi Partners, said that, increasingly, his advice to Chinese tech companies is to steer clear of the United States when expanding overseas — to follow instead the Chinese government’s diplomatic overtures and investments in places such as Southeast Asia, the Middle East and Africa.

“If you want to go out and tackle more difficult markets, sure, but obviously there’s consequences and additional costs,” Mr. Tang said. “Going forward, Chinese entrepreneurs in these tech companies should be aware of that.”

One unnamed entrepreneur put ByteDance’s position in even starker terms to the Chinese tech blog Huxiu on Monday: “Once the U.S. business is lost, half of the space for thinking about globalization has vanished.”

As uncertainty swirled on Sunday about whether Mr. Trump would allow Microsoft to continue negotiations with TikTok, ByteDance issued a late-night statement in China reiterating its commitment to going global.

“In the process, we are facing all kinds of complex and unimaginable difficulties,” the company said. The statement cited the tense geopolitical environment, culture clashes and, in an unusually direct jab at a competitor, “Facebook’s plagiarism and smears.”

Facebook is rolling out a TikTok-like feature called Reels on Instagram, which it owns. The company’s chief executive, Mark Zuckerberg, has also argued that undermining American tech companies with excess regulation could allow Chinese rivals to export their own, very different values to the world. Facebook declined to comment on ByteDance’s statement.

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Credit…Hiroko Masuike/The New York Times

For Mr. Zhang of ByteDance, TikTok’s run-in with the Trump administration has been an education in politics, though hardly his first.

Mr. Zhang falls on the geekier side of the tech founder spectrum. He repaired computers in college, and in past interviews, he appears most at home talking about algorithms and the flow of information. He is not a Communist Party member, he told The Atlantic magazine recently.

For many years, he echoed Mr. Zuckerberg in saying he ran a tech company, not a media outlet, which meant he should not be imposing his own judgments over content.

“I can’t accurately decide whether something is good or bad, highbrow or lowbrow,” he told the Chinese business magazine Caijing in 2016.

Mr. Zhang may have thought he was insulating himself in China. But the perils of that technology-driven approach were made clear in 2018, when the Chinese authorities shut down one of ByteDance’s oldest products, a humor app called Neihan Duanzi, for spreading vulgar material.

“For a long time, we put too much emphasis on the role of technology and didn’t realize that technology must be guided by core socialist values,” Mr. Zhang wrote in a public letter of apology.

ByteDance’s popular news aggregator app, Toutiao, had also been under fire for saucy content. In response, Toutiao began featuring more stories about Mr. Xi at the top of its feed.

By then, ByteDance had already begun expanding in Japan, India, Southeast Asia and beyond. TikTok was released in 2017 as the international edition of Douyin, one of ByteDance’s Chinese video apps.

TikTok had some early scrapes with foreign governments. In 2018, Indonesia temporarily blocked it for hosting inappropriate content. Despite the challenges, Mr. Zhang said at an event in Beijing that year that going global was the only way to access the talent and resources needed for long-term success.

He said he had studied another Chinese company’s rapid growth overseas to see how it could be done.

Which company? Huawei.

His choice was prescient in hindsight, though perhaps not in the way he intended. The Trump administration has for years sought to kneecap the giant Chinese maker of telecommunications equipment and smartphones. It, too, has been called a national security threat by White House officials.

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Credit…Lam Yik Fei for The New York Times

International growth was top of mind when Mr. Zhang began courting Musical.ly, a Chinese-made lip-syncing app that had found success in the United States and Europe. In late 2017, ByteDance agreed to buy Musical.ly for around $1 billion. ByteDance would later merge the app into TikTok, giving it a toehold in the West that would eventually propel it to wider success.

According to people with knowledge of the matter, the two parties did not approach the Committee on Foreign Investment in the United States, or CFIUS, to seek its blessing beforehand — a decision that would later come back to haunt ByteDance.

CFIUS (pronounced SIFF-ee-yuss) typically evaluates foreign deals involving an American business for possible national security risks. But it also claims jurisdiction over deals between foreign businesses that have significant American operations.

As TikTok became a smash hit in the United States, concerns arose about whether the app was censoring content that might offend Beijing. Late last year, The New York Times and others reported that CFIUS was looking into the Musical.ly deal. Washington politicians also began voicing fears that TikTok could be a conduit for China to meddle in American elections.

With pressure building, some of Mr. Zhang’s investors and advisers offered ideas for putting distance between TikTok and ByteDance, including reorganizing TikTok’s corporate or legal structure.

In an interview in November with The Times, Alex Zhu, a founder of Musical.ly who was then the head of TikTok, said the company wouldn’t rule out such changes.

“We continuously look at the company structure and optimize the structure,” Mr. Zhu said.

But instead of a major restructuring, Mr. Zhang opted for personnel changes. This spring, he reshuffled ByteDance executives in China and said he would personally devote more time and energy to Europe, the United States and other markets. In May, Liu Zhen, a former Uber executive in China who had been overseeing ByteDance’s global expansion, left the company. Mr. Zhu was replaced as TikTok’s head by Kevin Mayer, a veteran Disney executive in the United States.

ByteDance also embarked upon a lobbying push in Washington to sell the idea that TikTok’s allegiances were with the United States, not China. In meetings with lawmakers, lobbyists emphasized the app’s light, uplifting fare and the fact that many of its top leaders were American residents.

Last month, when American technology companies including Facebook and Google began reassessing their operations in Hong Kong in the wake of a new security law that gave the Chinese government greater powers in the territory, TikTok went further, announcing that it would stop operating in Hong Kong completely.

The move let TikTok demonstrate its willingness to stand up to Beijing, as its head of U.S. public policy later emphasized in an email newsletter to Capitol Hill. But Hong Kong had not been a major market for the app, making the decision look more like a publicity stunt than a self-sacrifice made on principled grounds.

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Credit…Christopher Lee for The New York Times

The Trump administration’s scrutiny continued unabated. After Mr. Trump failed to draw huge crowds at a June re-election rally in Tulsa, Okla., TikTok users claimed to have pulled off a prank by registering for tickets and then not attending the event. In early July, Secretary of State Mike Pompeo floated the idea of banning the app over security concerns.

Within weeks, Microsoft said it had received Mr. Trump’s go-ahead for pursuing a deal to buy TikTok’s U.S. operations. CFIUS had decided to order ByteDance to divest.

In a letter to ByteDance’s employees on Monday, Mr. Zhang made the recent turmoil sound more like a technical matter than an existential threat brought about by hostile geopolitical forces.

“Although we repeatedly emphasized that we are a private company, and that we are willing to make more technical changes to address the concerns, CFIUS still decided that ByteDance had to sell TikTok’s U.S. business,” Mr. Zhang wrote. “We do not agree with this decision, because we have always insisted on guaranteeing users’ data security, the platform’s neutrality and transparency.”

Lin Qiqing contributed research.