UAE's G42 Acquires $100 Million Stake In ByteDance

UAE artificial intelligence and cloud computing company Group 42, more commonly known as G42, has acquired at least a $100 million stake in ByteDance from current investors.

The acquisition through G42's 42XFund was reportedly led by the UAE's national security adviser Sheikh Tahnoon bin Zayed Al-Nahyan, and caused the unlisted Chinese owner of TikTok's value to dip at $220 billion.

ByteDance's new valuation is a significant markdown from its $300 billion valuation during a share buyback program in 2022, Economic Times reported. It is also a considerable discount from the valuations of between $300 million and $400 million it received in the secondary market a year ago.

According to reports, another undisclosed firm acquired more shares in ByteDance at a valuation of US$225 billion, following G42's most recent acquisition.

Before the acquisition, it was reported that TikTok was considering splitting from its parent firm due to national security issues. The move was allegedly to address concerns raised by the U.S. about the national security risks of TikTok, which has come under fire in recent months over fears that the Chinese government could get its hands on user data through the app and undermine Western security interests.

Previously, U.S. lawmakers moved to pass a bill that could ban TikTok from the country and reduce its users by over 113 million. Just last week, the White House endorsed a bipartisan bill that could grant U.S. President Joe Biden the authority to force a sale of the short-video app, which currently has over one billion users and generated US$11 billion in revenue in 2022.

Apart from the U.S., the app has been banned on government devices across Canada and the European Union.

However, TikTok has called the ban "basic misinformation," and claimed it does not collect more information than any other social media platforms.

ByteDance's valuation in the G42's latest transaction does not yet mirror potential impacts of the collapse of the Silicon Valley Bank, which left U.S. and China startups stunned with higher systemic risks.

Controlled by the UAE's "spy sheikh," G42 has been instrumental in building the country's portfolio in a wide range of industries, from cloud computing to driverless cars. Among the other innovations Sheikh Tahnoon has invested in through G42 are the Chinese COVID-19 vaccines during the height of the pandemic.

Meanwhile, ByteDance has managed to hit the big time overseas with upstarts like Shein Group, PDD Holdings, and AliExpress.