As the clock ticks for TikTok to find a new owner following President Joe Biden's signing of legislation that would ban the app in the United States unless its Chinese parent, ByteDance, sells it, a handful of American finance and tech tycoons are gearing up for multi-billion dollar bids. However, potential buyers face formidable obstacles in prying TikTok from ByteDance's hands and into American ownership.
Leading the pack of interested buyers is former Treasury Secretary Steven Mnuchin, who has openly expressed his desire to acquire the addictive app. Other suitors include former Activision Blizzard CEO Bobby Kotick, who has reportedly spoken to OpenAI CEO Sam Altman about a possible proposal, and speculation is rife that outspoken Pershing Square hedge fund chief Bill Ackman could mount a bid. Even "Shark Tank" multi-millionaire Kevin O'Leary has expressed interest in buying TikTok.
However, China's Commerce Ministry has stated that it would have to approve the divestiture of TikTok from ByteDance and that it is strongly opposed to any sale. This stance could make it unlikely for buyers to gain access to TikTok's ultra-addictive algorithm, the technology that keeps users engaged for hours on the app by showing them a stream of videos tailored to their interests. Without the algorithm, a potential buyer would only acquire a brand name and a user base, necessitating the rebuilding of the technology and the team who creates it from scratch.
Moreover, any buyer would need to raise billions of dollars, as some analysts have valued TikTok at over $100 billion with the algorithm, although it would be cheaper without it. ByteDance itself was valued at $220 billion last year, according to data from Pitchbook.
Antitrust concerns also pose a significant hurdle for potential buyers, especially for tech giants like Meta and Apple, which could afford the hefty price tag and have the technical expertise to build a new algorithm. Joel Thayer, principal at consulting and antitrust law firm Thayer PLLC, told The Post, "Every single one of those companies is under current antitrust actions. It would be next to impossible for a company already under antitrust scrutiny to buy a company that would give them more power and market share."
A source close to TikTok told The New York Post, "No tech company in the U.S. could get a TikTok purchase through regulators. So you take a step back and there aren't that many individuals who can do the financing, convince the board, and build the company."
While Mnuchin has been the most vocal about his interest in buying TikTok, Kotick may be best positioned to create an algorithm and build a technology company, sources told The Post. Kotick, who brokered the $69 billion sale of Activision Blizzard to Microsoft, has developed relationships with deep-pocketed investors and has experience in developing and building apps and games.
Other potential buyers include Jeffrey Yass, the Susquehanna founder who already owns 15% of ByteDance, and Walmart's CEO Doug McMillon, who had been in talks to partner with software giant Oracle to buy TikTok's US operations in 2020.
Despite the interest from various parties, TikTok CEO Shou Zi Chew has assured users that the app isn't "going anywhere" and that the company would be pursuing legal action to prevent a ban or divestiture, which could delay a sale. The outcome of TikTok's forced sale remains uncertain, as political factors, such as the potential re-election of former President Donald Trump, who has expressed opposition to a TikTok ban, could also influence the process.
