TikTok’s fate could be left up to Beijing thanks to a “secret” arrangement granting the Chinese government leverage over any potential deal involving the platform, “Shark Tank” investor Kevin O’Leary told FOX Business on Monday.
“There is something called a secret golden share that every Chinese company has to issue to the CCP leadership. That’s Xi [Jinping] himself, and it turns out that ByteDance can’t negotiate anything unless he’s made a decision,” the O’Leary Ventures Chairman told “Mornings with Maria” guest host Cheryl Casone.
“The secret share is a veto power over all other shareholders,” he explained. “They do not have any rights once the secret share has been issued, so now we’re dealing with what to do with the secret share, because until she decides what’s going to happen, it doesn’t matter what shareholders think or the CEO or any of the management, it’s irrelevant. It’s the secret golden share that determines the fate of TikTok now.”
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As The New York Times explained, in this arrangement, the “Chinese government buys a small portion of a company’s equity in exchange for a seat on its board and veto power over certain company decisions.”
Speaking on the subject later on “Varney & Co.,” O’Leary said the news may come as a surprise to other investors involved with Chinese companies.
“They’re all subject to the holder of the secret golden share, and I would think that contravenes some U.S. securities laws, if you’re listed on a New York exchange or NASDAQ or any other exchange,” he said.
“Rumor has it today, here in Washington, that Lindsey [Graham]… will be launching a bill on this very shortly because we’re learning so much through this TikTok situation. There’s no deal yet. This deal now is in Trump’s hands and it will be his deal. Unfortunately, the option to extend 90 days is not currently in the existing law. So that’s going to have to be modified by Congress. And the option to have any Chinese ownership is not permitted by the 9 to 0 Supreme Court order. So… our hands are tied as buyers, and we are going to have to abide by the law unless President Trump is able to change it.”
TikTok has contrarily said, however, that, “an entity affiliated with the Chinese government owns 1% of a ByteDance subsidiary, Douyin Information Service,” and says the holding “has no bearing on ByteDance’s global operations outside of China, including TikTok,” according to Reuters.
The popular short video platform went dark for millions of users across the U.S. late Saturday after the Supreme Court, citing national security concerns, upheld a bipartisan law signed by President Biden last spring that required the app’s China-based parent company, ByteDance, to sell the platform or face a U.S. ban.
While briefly going dark, the app featured a shout-out to Trump, who had previously said he will “most likely” give TikTok a 90-day extension from the Sunday deadline after assuming office.
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The app returned hours later, but its future remains in limbo.
Just minutes after the Supreme Court’s ruling, O’Leary put a $20 billion cash offer for the app on the table, arguing that selling to an American syndicate is the “obvious solution.”
He told Casone he has not had any negotiations with ByteDance thanks to the “golden share.”
Reuters and FOX Business’ Alexandra Koch, Bradford Betz and Landon Mion contributed to this report.
