Former Treasury Secretary Mnuchin Considering Acquiring TikTok

Alex Barinka and David Westin
Bloomberg News
(TNS)

Steven Mnuchin, the former U.S. Treasury Secretary, said he’s still interested in buying TikTok’s U.S. operation from its Chinese owner, and believes the social media app’s critical video recommendation technology could be replicated.

“I’ve actually spoken to a lot of tech companies on working about rebuilding this,” Mnuchin said Tuesday in an interview with Bloomberg Television.

“I do believe the algorithms could be rebuilt. So my plan, if we were to purchase, it would be to rebuild the technology under U.S. leadership, make sure that it’s all disconnected from ByteDance going forward, and that it is very robust and secure.”

A federal law passed in the U.S. last month requires TikTok’s Chinese parent company, ByteDance Ltd., to sell its stake in the popular video app within a year or face being banned in the country.

Even if it were to agree to divest — which ByteDance has said it won’t do — the company is unlikely to sell its core recommendation algorithm, the key technology that has made TikTok a hit and propelled the app to more than 170 million U.S. users a month. The Chinese government would also have to sign off on any such deal.

“The Chinese government has been very clear that they won’t give an export license on the algorithm and I understand that,” Mnuchin said. “We have sensitive technology that we don’t want to transfer to them, and they don’t want to transfer this to the U.S.”

That conundrum has left some to speculate a buyer may look to acquire TikTok’s American operations and users – but not the technology that underpins the app, which would be incredibly difficult and expensive to duplicate.

Tech leaders like Meta Platforms Inc. and Alphabet Inc. have spent years trying to create similar experiences, to varying degrees of success. Mnuchin didn’t identify the technology companies he had spoken to about potentially reconstructing TikTok’s central technology.

TikTok on Tuesday sued the U.S. government in an attempt to block the divest-or-ban law, claiming that the legislation stifles free speech for the app’s users.

Supporters of the law say TikTok’s ties to China through its parent company open the possibility that that country’s government would access U.S. users’ data or influence what shows up on their feeds – an assertion that TikTok and officials in Beijing have consistently rejected.

In March, Mnuchin told CNBC he’d spoken to potential co-investors about acquiring TikTok with the intention of remaking the app in the U.S. with homegrown technology. He didn’t provide additional details at the time.

Mnuchin had a key role in the initial efforts by President Donald Trump to ban the app via a 2020 executive order. As Treasury Secretary, he was involved in the discussions of what a separation from ByteDance would look like at the time. When President Joe Biden took office, that executive order was later pushed aside.

Eric Schmidt, the former chief executive officer of Google, said Tuesday that he had explored a possible purchase of TikTok but has moved on from the idea. He said the U.S. government would be better off regulating TikTok, rather than banning it or having the app be subject to judicial action.

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Technology