Steve Mnuchin pitching investors on plan to buy TikTok, rebuild algorithm in US: report

Former Treasury Secretary Steven Mnuchin has reportedly raised eyebrows by telling potential investors that he would seek to rebuild TikTok’s recommendation algorithm in the US if he is able to buy the embattled China-owned video app.

Last month, Donald Trump’s ex-cabinet member revealed that he was going to “put together a group” to potentially buy TikTok after House lawmakers passed a bill that would force its Beijing-based parent company, ByteDance, to sell within six months or face a total US ban.

Mnuchin, 61, has reportedly pitched investors on the possibility of buying the TikTok brand in a deal that wouldn’t include its algorithm, which is subject to strict export laws in China, the Washington Post reported, citing sources familiar with the situation. Instead, Mnuchin would attempt to build his own version of the software.

The investment banker has reportedly argued that rebuilding the algorithm from the ground up would potentially circumvent a likely attempt by the Chinese government to block a forced sale of TikTok. Additionally, Mnuchin has asserted that doing so could allow him to buy the app at a discount.

Mnuchin’s purported plan has drawn skepticism among insiders who point out that the creation of algorithms for power popular social media apps is far more easily said than done — especially within the 180-day window stipulated by the House’s bill.

“This is like rebuilding Facebook — that’s the task here,” a source with knowledge of Mnuchin’s pitch told the Washington Post. “It can’t be done in 180 days — or even years.”

Matt Perault, a University of North Carolina professor and former Facebook employee, told the outlet that “everyone wants to build a TikTok-level algorithm.”

“All the biggest companies have thrown a lot of money and engineering talent at that issue and have struggled to do it,” Perault said. “If Steve Mnuchin thinks he can do that and succeed where a lot of successful companies have struggled, good luck.”

Mnuchin reportedly declined to comment on the report. The Post has reached out to his firm, Liberty Strategic Capital, for comment.

Estimates on TikTok’s potential valuation vary, but the price would be steep. Bloomberg Intelligence estimated that its US business could be worth up to $40 billion, while others have placed the number close to $100 billion or beyond.  

Mnuchin hinted at his approach during a March 14 appearance on CNBC, when he asserted that the TikTok app would need to be “rebuilt in the US” after an acquisition.

“I think the Chinese will be fine selling it so long as there’s not a technology transfer along the way,” Mnuchin said at the time.

Mnuchin, whose firm led the $1 billion capital raise for struggling New York Community Bancorp last month, has yet to name any potential investors who could join his bid.

However, he has reportedly had discussions with cloud-computing giant Oracle as well as former Activision-Blizzard boss Bobby Kotick. Last month, the Wall Street Journal reported that Kotick had approached ByteDance about a potential deal.

TikTok has argued the House bill is a de facto ban and that its six-month timeline is too tight to successfully complete a sale — even if it were inclined to sell. The company has vowed to fight the legislation in court if it proceeds.

TikTok did not immediately return a request for comment.