TikTok CEO urges users to protest bill, warns it “will lead to a ban.”
Former US Treasury Secretary Steven Mnuchin is reportedly assembling an investor group to buy TikTok as the US comes closer to enacting legislation forcing the company to either divest from Chinese ownership or face a nationwide ban.
“I think the legislation should pass, and I think it should be sold,” Mnuchin told CNBC Thursday. “It’s a great business, and I’m going to put together a group to buy TikTok.”
Mnuchin currently leads Liberty Strategic Capital, which describes itself as “a Washington DC-based private equity firm focused on investing in dynamic global technology companies.”
According to CNBC, there is already “common ground between Liberty and ByteDance,” as Softbank—which invested in ByteDance in 2018—partnered with Liberty in 2021, contributing what Financial Times reported was an unknown amount to Mnuchin’s $2.5 billion private equity fund.
TikTok has made no indication that it would consider a sale should the legislation be enacted. Instead, TikTok CEO Shou Zi Chew is continuing to rally TikTok users to oppose the legislation. In a TikTok post viewed by 3.8 million users, the CEO described yesterday’s vote passing the law in the US House of Representatives as “disappointing.”
“This legislation, if signed into law, WILL lead to a ban of TikTok in the United States,” Chew said, seeming to suggest that TikTok’s CEO is not considering a sale to be an option.
But Mnuchin expects that TikTok may be forced to choose to divest—as the US remains an increasingly significant market for the company. If so, he plans to be ready to snatch up the popular app, which TikTok estimated boasts 170 million American monthly active users.
“This should be owned by US businesses,” Mnuchin told CNBC. “There’s no way that the Chinese would ever let a US company own something like this in China.”Advertisement
Chinese foreign ministry spokesperson Wang Wenbin has said that a TikTok ban in the US would hurt the US, while little evidence backs up the supposed national security threat that lawmakers claim is urgent to address, the BBC reported. Wang has accused the US of “bullying behavior that cannot win in fair competition.” This behavior, Wang said, “disrupts companies’ normal business activity, damages the confidence of international investors in the investment environment, and damages the normal international economic and trade order.”
Liberty and Mnuchin were not immediately available to comment on whether investors have shown any serious interest so far.
However, according to the Los Angeles Times, Mnuchin has already approached a “bunch of people” to consider investing. Mnuchin told CNBC that TikTok’s technology would be the driving force behind wooing various investors.
“It would be a combination of investors, so there would be no one investor that controls this,” Mnuchin told CNBC. “The issue is all about the technology. This needs to be controlled by US businesses.”
Mnuchin’s group would likely face competition to buy TikTok. ByteDance—which PitchBook data indicates was valued at $223.5 billion in 2023—should also expect an offer from former Activision Blizzard CEO Bobby Kotick, The Wall Street Journal reported.
It’s unclear how valuable TikTok is to ByteDance, CNBC reported, and Mnuchin has not specified what potential valuation his group would anticipate. But if TikTok’s algorithm—which was developed in China—is part of the sale, the price would likely be higher than if ByteDance refused to sell the tech fueling the social media app’s rapid rise to popularity.
In 2020, ByteDance weighed various ownership options while facing a potential US ban under the Trump administration, The New York Times reported. Mnuchin served as Secretary of the Treasury at that time. Although ByteDance ended up partnering with Oracle to protect American TikTok users’ data instead, people briefed on ByteDance’s discussions then confirmed that ByteDance was considering carving out TikTok, potentially allowing the company to “receive new investments from existing ByteDance investors.”
The Information provided a breakdown of the most likely investors to be considered by ByteDance back in 2020. Under that plan, though, ByteDance intended to retain a minority holding rather than completely divesting ownership, the Times reported.
US a significant market for TikTok
While Mnuchin and other investors weigh TikTok’s valuation, TikTok usage appeared to be slowing at the start of 2024. That trend seems unlikely to dissuade investors, though.
In 2023, Instagram actually beat TikTok as the most downloaded app, while TechCrunch reported data from Sensor Tower indicating that TikTok usage was starting to decrease, possibly due to TikTok Shop launching in the US. TikTok users complained that the feature turned “the app into an ‘ad-filled wasteland,'” TechCrunch reported.
More recently, Sensor Tower’s vice president of insights, Seema Shah, and senior insights analyst Abraham Yousef shared March reports with Ars showing that although downloads aren’t as high as Instagram, TikTok still engaged users more in 2023. TikTok users spent an average of 95 minutes daily on the app, significantly more than Instagram (62 minutes), Facebook (53 minutes), and X (30 minutes).
TikTok also outperformed Instagram in in-app purchase revenue in 2023, bringing in more than $4 billion worldwide—25 times more than Instagram.
For TikTok, Shah’s and Yousef’s reporting showed, risking a ban and vanishing from the US market would trigger significant losses. “Should TikTok face a possible banning in the states, the app’s total in-app purchase revenue would be materially affected,” their report said, as “the US has increasingly become an important market for TikTok.” Out of TikTok’s total in-app purchase revenue, the US only comprised 6 percent in 2020, but that figure rose to 20 percent in 2023.Advertisement
Shah and Yousef also shared a report providing insights from TikTok’s 2020 ban in India, showing “how those same trends could apply to the US market if the bill passes and is approved by President Biden.”
Before India’s ban, “India was one of TikTok’s fastest growing markets,” boasting nearly 150 million monthly active users. Of TikTok’s total in-app purchase revenue, India represented 25 percent of all purchases and 50 percent of TikTok downloads in 2019.
By 2021, India’s market represented 0 percent in these categories, the report said, while India’s TikTok users shuffled over to other short-form video apps that then experienced explosive growth. Those included local social platforms, as well as Instagram and YouTube.
TikTok seems to expect that a US ban would only benefit entrenched social media giants like Meta or Google.
In his TikTok post, Chew warned TikTok users that the US “bill gives more power to a handful of other social media companies. It will also take billions of dollars out of the pockets of creators and small businesses. It will put more than 300,000 American jobs at risk, and it will take away your TikTok.”
This year, Sensor Tower data showed that despite the potential ban looming, “TikTok has maintained its US popularity,” outpacing Facebook and Instagram by approximately a million installs and still dominating other social media platforms in terms of time spent on the app.
Chew urged users to continue flooding Congress with calls in protest of the House bill, which is expected to meet more resistance in the Senate.
“We believe we can overcome this together,” Chew told millions of TikTok users, adding, “Love you all.”
