Steve Mnuchin plans to partner with an AI company that can quickly rebuild TikTok’s algorithm as he seeks to orchestrate a blockbuster bid to acquire the China-owned app, The Post has learned.
The former Treasury secretary first revealed last month that he was exploring a bid to buy TikTok after House lawmakers voted to pass a bill requiring that its parent company, Beijing-based ByteDance, divest within six months or face a total ban in the United States.
Now, insiders say Mnuchin is presenting a plan to rebuild TikTok’s algorithm in the United States as the only likely way to satisfy congressional concerns that the app poses a national security risk, as well as China’s strict export laws that could block a sale.
The Senate is expected to hold hearings on the bill later this year, although no votes have yet been scheduled.
Mnuchin believes that any effort to rebuild TikTok’s sophisticated algorithm would require a partner with access to advanced AI capabilities and expertise, the sources said. Given the size and complexity of the company, the former Trump cabinet member could partner with several technology companies, the sources added.
A spokesperson for Mnuchin declined to comment. TikTok did not return a request for comment.
Mnuchin has previously said publicly that TikTok should be “rebuilt in the United States” after an acquisition, arguing on CNBC that China “would be able to sell it as long as there is no technology transfer along the way “.
Several experts told the Post that Oracle — the software giant run by Trump billionaire Larry Ellison — is a logical candidate to join his bid. TikTok has already committed to storing U.S. user data on servers operated by Oracle as part of “Project Texas,” a plan to address national security and user privacy concerns.
Oracle did not return a request for comment.
When Mnuchin was Treasury secretary, Oracle nearly bought TikTok as part of the Trump administration’s efforts to force ByteDance to divest. Experts note that a deal with Oracle likely wouldn’t attract as much regulatory scrutiny as a deal with big tech companies like Google, Meta and Apple.
Oracle “would make sense, given its involvement in the history of this saga,” according to Tobin Marcus, a former economic adviser to then-Vice President Biden during the Obama administration.
Microsoft, which is the main investor in OpenAI, is another logical candidate. The Big Tech giant also nearly bought TikTok in 2020, with CEO Satya Nadella later remarking that the failed bid was “the strangest thing I’ve ever worked on.”
Last month, the Washington Post reported that Mnuchin had told potential partners that he was in contact with Oracle as well as former Activision-Blizzard chief Bobby Kotick, who was also said to be interested in buying of the application.
A representative for Kotick did not return a request for comment.
The app, which has more than 170 million U.S. users, will certainly be expensive. Bloomberg Intelligence estimates its U.S. operations could be worth as much as $40 billion, while others put the price tag at $100 billion or more.
Although some critics have called Mnuchin’s plan overkill, rebuilding the algorithm is “really the only option” given China’s strict export controls on AI, according to Andrew Grotto, former senior policy director cybersecurity under Presidents Barack Obama and Donald Trump.
“I don’t think it’s easy, but I also think that with the right level of resource spending, in a way, there’s no limit,” Grotto said. “Whether the product is good or not as good as TikTok’s original underlying algorithm is another question. It appears that a minimally viable product is achievable.
Rob Atkinson, president of the Information Technology and Innovation Foundation think tank and a member of TikTok’s content and safety advisory board, agrees.
“I don’t know if it’s an irreplaceable algorithm,” Atkinson said. “It seems like with all the capabilities of today’s AI, you could get a really good algorithm that might not be 100% as good, but pretty good and over time would evolve probably to what it is today, if not better. So I don’t think that’s the problem.
Rebuilding the app would be just one challenge for Mnuchin’s candidacy, which is expected to win approval from the U.S. and Chinese governments.
The path to the Senate may be strewn with pitfalls, according to Marcus, who considers that a vote is unlikely before the elections. Calls for a ban grew in March 2023 after TikTok CEO Shou Chew’s disastrous testimony on Capitol Hill, only to fizzle for more than a year, he noted.
“The Senate certainly doesn’t seem eager to just take the House bill and pass it as is, so there’s certainly an opportunity to make changes,” Marcus said.
Across the Pacific, critics say it is difficult for Mnuchin or any other potential buyer to get the necessary approval from the Chinese government, which has repeatedly pledged to block any forced sale of TikTok.
A tech executive told the Post last month that Beijing would see it as a “huge attack on its honor and integrity as a sovereign nation” if the U.S. government got its way.
Still, the Chinese government may find it difficult to turn down a huge market value deal for TikTok’s U.S. operations — especially as its President Xi Jinping works overtime to reassure Western business leaders that the country is open for business.
“I think there is a way for them to sign. I don’t think Congress is bluffing,” Atkinson said. “You would significantly diminish the value of a leading Chinese technology company. I think the Chinese government realizes that it would be much better for them if ByteDance could get a giant infusion of money and use it to expand and do other things.
Critics also warn that delaying the deadline to sell or ban TikTok ensures that the Chinese Communist Party could use the app to interfere in the presidential election — one of the main reasons why lawmakers first adopted this legislation.
“The longer he remains under Beijing’s influence, the more control Chinese President Xi Jinping has over the news and information that Americans under the age of thirty-five consume and digest,” said Chris Fenton, administrator of the US-Asia Institute. “Supporting a fair sale to a U.S. buyer as quickly as possible rewards investors, satisfies users, and protects national security interests.” »
As The Post reported, Senate Majority Leader Chuck Schumer (D-NY) is under pressure to hold a vote on the bill, which has drawn bipartisan support even as some lawmakers fear that Muzzling TikTok could violate the First Amendment or establish bad precedent for targeting specific companies via government legislation.
Senate lawmakers are reportedly debating possible changes to the bill, including extending the six-month period or broadening its scope to target social media. Sen. Maria Cantwell (D-Wash.), who chairs the Senate Commerce Committee, would like to hold at least one public hearing before any potential vote.
Indeed, the tight six-month divestment window provided by the House bill is seen as a major obstacle to the plan – with 12 to 18 months seen as a more realistic time frame to reach a deal that includes rebuilding a working version of the software, the sources added.
Potential buyers will likely seek a deal that would allow TikTok to remain operational using its current software until the new algorithm is ready to be implemented – even if that means passing the stipulated divestment window.
Cantwell indicated she favored an extended deadline, telling reporters that it “would be a good part of ensuring success.”
New York Post
