In a strategic move that could reshape the social media landscape, former Treasury Secretary Steven Mnuchin is orchestrating an ambitious plan to acquire TikTok through an investor group. This initiative aligns with the recent legislative developments where a bipartisan bill, gaining traction in Congress, threatens to disrupt TikTok’s operations in the United States unless ByteDance divests it.
The House of Representatives has already nodded to the bill, setting the stage for a potential divestiture or a complete ban of TikTok on American soil. Mnuchin, currently at the helm of Liberty Strategic Capital, expressed his support for the legislation on CNBC’s “Squawk Box,” affirming his belief in the necessity of the sale and his commitment to leading the acquisition charge.
The ties between Liberty Strategic and ByteDance are not new; SoftBank Vision Fund, a significant investor in ByteDance since 2018, also contributes as a limited partner to Mnuchin’s investment firm. This connection could play a pivotal role in the unfolding negotiations.
As the bill progresses to the Senate, its fate hangs in the balance, though President Joe Biden has indicated his willingness to sign it into law. Mnuchin’s stance is clear: he argues that such a platform should be under American ownership, citing the improbability of China allowing a similar scenario with a U.S. company on its turf.
TikTok’s debate over influence extends beyond political corridors
The Debate over TikTok’s influence extends beyond political corridors, with prominent tech investors like Peter Thiel, Vinod Khosla, and Keith Rabois vocalizing their concerns over the platform’s impact. Despite this, the possibility of ByteDance selling TikTok to an American entity remains uncertain, especially in light of the Chinese government’s potential resistance to such a move.
Amidst intense lobbying efforts by TikTok to counter the bill, including direct appeals to its vast user base, the company’s CEO Shou Zi Chew, has hinted that selling is not on the table. The Chinese Foreign Ministry has echoed this sentiment, criticizing the bipartisan effort as fundamentally flawed.
ByteDance’s valuation soared to $220 billion in its latest funding round in 2023, but the specific worth of TikTok, particularly its U.S. operations, is yet to be determined. Given its Chinese origins, the app’s algorithm, its crown jewel, is a point of contention for lawmakers who view it as a conduit for undue influence. Any deal excluding the algorithm would likely diminish TikTok’s appeal to prospective buyers.
While Mnuchin has not disclosed the identities of the other investors or the estimated value of the deal, interest in TikTok remains high. Reports suggest that Bobby Kotick, former CEO of Activision Blizzard, is also exploring acquisition opportunities.
This development follows Mnuchin’s recent investment endeavours, including a significant contribution to New York Community Bancorp’s $1 billion capital raise. His tenure as Treasury Secretary under Donald Trump’s administration was marked by a contentious approach towards TikTok, culminating in a data partnership with Oracle. However, Trump’s stance has shifted, opposing a ban on the app.
As the situation evolves, TikTok’s response to these potential changes remains to be seen, with the company yet to comment on the unfolding events.
