Kevin O’Leary, known for his ventures in business, is currently putting together a syndicate for a potential purchase of TikTok. The starting bid for the short video-sharing platform is set to be between $20 billion to $30 billion, which marks a significant cut in valuation from the company’s last funding round.
TikTok, valued at $220 billion according to PitchBook data, has gained immense popularity due to its user preference-based algorithms. However, any deal for the platform is likely to exclude these algorithms. O’Leary has mentioned on CNBC’s “Street Signs Asia” that it is unlikely for the Chinese government to sell the algorithms along with the platform. Therefore, a potential buyer would need to recreate these algorithms with U.S. code, transforming the platform from “TikTok China to TikTok U.S.A.” This transformation contributes to the valuation cut of the platform.
In March, the U.S. House of Representatives voted in favor of a bill that would require TikTok-owner ByteDance to either divest its global app or face a ban. However, it might take some time before this legislation reaches the Senate floor. It is also uncertain whether the Chinese government would allow ByteDance to sell TikTok to a U.S. buyer. O’Leary has stated that there is a possibility of a ban and forced sale of TikTok next year following the U.S. presidential election. The White House’s approval is essential for any potential deal due to national security implications.
Aside from O’Leary, former U.S. Secretary of the Treasury Steve Mnuchin has also expressed interest in purchasing TikTok. O’Leary has discussed the matter with Republican presumptive presidential nominee Donald Trump and plans to meet Joe Biden, who is running for a second term. He is in talks with other parties interested in joining the buyout syndicate and intends to involve sovereign wealth funds from April. O’Leary mentioned that this acquisition is the most complex deal ever in social media, emphasizing the need to develop a new algorithm for the platform.
The potential purchase of TikTok by Kevin O’Leary and other interested parties presents a challenging yet promising opportunity. With the intricate process of recreating algorithms and navigating through legislative hurdles, the future of TikTok’s ownership remains uncertain but intriguing.