Mnuchin still considering TikTok purchase, says technology could be rebuilt

Former Treasury Secretary Steven Mnuchin said Tuesday that he is still “very interested” in buying TikTok and suggested its technology could be rebuilt even if the Chinese government bars the app’s China-based parent company ByteDance from selling the algorithm. 

“I’ve actually spoken to a lot of tech companies on working about rebuilding this,” Mnuchin told Bloomberg Television. “I do believe the algorithms could be rebuilt.”  

“So my plan, if we were to purchase it, would be to rebuild the technology under U.S. leadership, make sure that it’s all disconnected from ByteDance going forward, and that it is very robust and secure,” he said. 

The push to buy the popular social media app comes in the wake of a new law, signed by President Biden last month, requiring ByteDance to sell TikTok within about a year or face a ban on U.S. networks and online app stores. 

However, even if ByteDance is willing to sell TikTok, it may not be allowed to sell the algorithm the app utilizes. 

“The Chinese government has been very clear that they won’t give an export license on the algorithm, and I understand that,” Mnuchin said. “We have sensitive technology that we don’t want to transfer to them, and they don’t want to transfer this to the U.S.” 

The former Treasury secretary also warned Tuesday that litigation could stand in the way of efforts to buy the app and rebuild its technology. 

“We think, given the year, it can be rebuilt,” he told CNBC’s “Squawk on the Street.” “But the problem is, if they’re gonna pursue litigation and that takes six months, it will inevitably end up with too short of a period of time to rebuild the technology.” 

TikTok and ByteDance sued Tuesday to block the law, arguing that it violates the First Amendment.  

It also alleged that “qualified divestiture” is “simply not possible: not commercially, not technologically, not legally,” and would lead to a shutdown of the app in the U.S., cutting off millions of daily users. 

“The best outcome would be if they agree to do a deal now and you have a year to rebuild the technology, which I think would be a major effort but could be done,” Mnuchin said.  

“But my concern is, if they spend six months litigating and then they decide to do a deal and there’s only six months left, it’s just impossible to build the technology in that time frame,” he added. 

Mnuchin also suggested that the best approach could be investing in TikTok to dilute Chinese ownership rather than purchasing the app. 

“I think it’s actually the best way to do it because there is 60 percent foreign ownership now, and I think many of those investors would like to stay in,” he told CNBC. “So it doesn’t have to be a complete sale. It just has to be disconnected from ByteDance, and it needs to get the Chinese ownership below 20 percent to comply with the law.”