The mandated sale of TikTok's US operations values the company at a fraction of its market worth (~$28B vs. an estimated $120B). This isn't a fair market transaction; it's a politically engineered deal that will hand a massive, near-guaranteed 300-400% return to a select group of connected investors.
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In heavily regulated or legally ambiguous industries, a founder's most valuable asset can be political connections. One startup literally used a pitch deck slide showing its co-founder with prominent politicians to signal their ability to influence future legislation in their favor. This represents a stark, real-world "crony capitalism" business strategy.
As traditional economic-based antitrust enforcement weakens, a new gatekeeper for M&A has emerged: political cronyism. A deal's approval may now hinge less on market concentration analysis and more on a political leader’s personal sentiment towards the acquiring CEO, fundamentally changing the risk calculus for corporate strategists.
The podcast reveals a key insight into China's geopolitical strategy. Xi Jinping privately dismissed TikTok as "spiritual opium," a low-cost asset he was willing to sacrifice. The sale was not a major loss but an easy concession to secure continued dialogue with the U.S. on more critical issues, reframing the event as a calculated move.
The fastest path to generating immense wealth is shifting from pure innovation to achieving regulatory capture via proximity to the president. This strategy is designed to influence policy, secure government contracts, or even acquire state-seized assets like TikTok at a steep discount, representing a new form of crony capitalism.
The U.S. government (via CFIUS) forced Grindr's Chinese owner to sell within one year over national security concerns. This created a distressed, time-sensitive M&A situation with a limited buyer pool, which savvy, non-traditional investors were able to capitalize on.
Despite a potential US ownership deal, TikTok remains a national security risk because the core algorithm will still be licensed from China. Control over the information flow to Americans is the real issue, not data storage location, making the deal a superficial fix.
Despite Congress passing and the Supreme Court upholding a law to force a sale of TikTok on national security grounds, the Trump administration is simply not enforcing it. Instead, it's pursuing a private deal, demonstrating how stated national security imperatives can be abandoned for political or business expediency.
Profitable Chinese giants like ByteDance trade at a fraction of their Western counterparts' multiples. This "China discount" stems not from business fundamentals but from the unpredictable risk of the Communist Party "smiting" successful companies and overarching geopolitical tensions, making them un-investable for many.
![Dan Wang - The US vs China In The 21st Century - [Invest Like the Best, EP.444] thumbnail](https://megaphone.imgix.net/podcasts/e1599a88-a9f6-11f0-b532-e3695bb27d60/image/0f5c07552cef2689e5834d56786ad6f1.jpg?ixlib=rails-4.3.1&max-w=3000&max-h=3000&fit=crop&auto=format,compress)
The forced sale of TikTok to a hand-picked group of political donors at a steep discount is not a genuine national security solution but a form of cronyism. It bypasses a competitive auction, enriches allies, and likely fails to sever the Chinese government's control over the algorithm, achieving the worst of all outcomes.
In its hostile takeover bid for Warner Bros., Paramount's key pitch for regulatory approval stems from its financing. The deal is funded by Trump-allied figures like Larry Ellison, Jared Kushner, and Middle Eastern sovereign wealth funds, creating a belief that a potential Trump administration would favor their acquisition over Netflix's.
