A view shows TikTok's office after the US House of Representatives overwhelmingly approved a bill giving TikTok's Chinese owner ByteDance about six months to divest the short-video app's US assets or face a ban, in Culver City, California, March. 13, 2024
Mike Blake | Reuters
Kevin O'Leary is assembling a group for a potential purchase of TikTok, with an offer starting at $20 billion to $30 billion — an as much as 90% cut in the company's valuation from the company's last funding round.
Any deal for the short-form video-sharing platform — valued at $220 billion in 2023, according to PitchBook data — would likely cut out the algorithms based on user preferences that helped drive its huge success, the O'Leary Ventures boss said. He said this on CNBC's “Street Signs Asia” program. a
“It's the largest entertainment and business network in America as it is today, so it's of great importance and great value,” he said Friday.
But the Chinese government is unlikely to sell the algorithms, “so what you get is the valuable domestic brand TikTok and 170 million users, with no data,” O’Leary said.
The potential buyer would have to “re-simulate” those algorithms using US code and act as a “host” to transform the platform from “TikTok China to TikTok USA” – hence the devaluation.
Earlier in March, the US House of Representatives voted in favor of a bill that would force TikTok owner ByteDance to either divest its leading global app or face an effective ban. However, it could be months before any TikTok-related legislation reaches the Senate.
It also remains unclear whether the Chinese government will allow ByteDance to sell TikTok to a US buyer. The company has lobbied hard against the bill.
However, O'Leary said there is at least a 50% chance the social media giant will be banned and forcibly sold early next year after the US presidential election, and he is preparing for that possibility.
Any potential deal would need the White House's blessing given its national security implications. O'Leary said he has already discussed the matter with presumptive Republican presidential nominee Donald Trump and plans to meet with Joe Biden, who is seeking a second term.
The O'Leary Ventures boss also said he is in talks with other parties interested in joining the buyout group, and that he will be soliciting sovereign wealth funds from April.
Separately, former US Treasury Secretary Steve Mnuchin has also expressed interest in purchasing TikTok.
“This is the most complicated deal ever in social media, and I have to build a new algorithm,” O'Leary said. “It's a very interesting deal, and I love it.”
TikTok did not immediately respond to a request for comment.
