TikTok

Steven Mnuchin wants to buy TikTok without the one thing that makes it so valuable: the algorithm

Author: Editors Desk, Analysis by Lloyd Lee Source: Business Insider:::

March 31, 2024 at 06:36

Steven Mnuchin, the former US Treasury Secretary, says he wants to rebuild TikTok. Patrick T. Fallon/AFP via Getty Images

- - Former Treasury Secretary Steven Mnuchin said he wanted to buy TikTok.
  - Part of his plan involves scrapping the original algorithm and rebuilding the app.
  - That's really hard to do, critics say.

Earlier in March, during an interview on CNBC's "Squawk Box,'" Steven Mnuchin, the former US Treasury Secretary, said he was building a team of investors that could buy TikTok within six months.

That timeline is due to a bipartisan House bill, passed on March 13, that would ban TikTok unless the app is sold to a US buyer within 180 days. The ban stems from some US lawmakers' concern that China's government exerts too much control over companies and that it can, in turn, demand that entities like TikTok cough up massive amounts of personal data or use the platform to influence politics abroad.

So far, several wealthy and powerful people have stepped up as potential buyers. Mnuchin is one of them. But his plans are already being met with much skepticism.

For one, TikTok — with its over 170 million active US users — is expensive. By one estimate, the app is worth $100 billion, CNN reported.

Think about how Elon Musk, one of the world's richest men, scrambled to raise the necessary capital to buy Twitter for less than half that price.

Then there's Mnuchin signaling that he could bypass China's red tape on tech exports by rebuilding the app from scratch, The Washington Post reported.

"The app needs to be rebuilt in the US, it needs to be US technology," Mnuchin told CNBC.

In other words, Mnuchin wants to buy TikTok without the key ingredient that makes the app so valuable and addictive — its algorithm.

Some are highly skeptical of this proposition.

Mnuchin has told potential investors that buying TikTok without its code could make the app cheaper to buy, two sources familiar with Mnuchin's pitch told the Post. Still, it's precisely what's under the hood that made the app so successful and able to cultivate more than a billion global users.

Matt Perault, a professor at the University of North Carolina and former director of Facebook's public policy team, told the Post that many tech companies aspire to build an algorithm like TikTok.

"All the biggest companies have thrown a lot of money and engineering talent at that issue and have struggled to do it," Perault told the Post. "If Steve Mnuchin thinks he can do that and succeed

Mnuchin hasn't delved too much into how he plans to rebuild TikTok. He did tell CNBC that "a lot can be done in six months."

What or how much that exactly is isn't clear. But TikTok, launched internationally in 2017, certainly didn't get to where the app is now in six months.

"This is like rebuilding Facebook — that's the task here," a source familiar with Mnuchin's pitch told the Post. "It can't be done in 180 days — or even years."

Mnuchin and a spokesperson for TikTok did not respond to a request for comment sent during the weekend.