Steve Mnuchin seeks AI partner to rebuild TikTok’s algorithm: sources

Steve Mnuchin is coordinating a major bid to acquire the Chinese-owned app and is seeking a partnership with an AI company that can quickly rebuild TikTok’s algorithm, the Post reported. .

The former Treasury secretary first revealed last month that he was considering buying TikTok after lawmakers passed a bill that would require Beijing-based parent company ByteDance to sell within six months. did.

Now, officials say Mnuchin is the only possibility to satisfy Congressional concerns that the app poses a national security risk and China’s strict export laws that could block sales. One way to do this is to propose a plan to rebuild TikTok’s algorithm in the United States.

The Senate is scheduled to hold hearings on the House bill later this year, but a vote has not yet been scheduled.

Mnuchin believes rebuilding TikTok’s sophisticated algorithms will require a partner with access to advanced AI capabilities and expertise, the sources said. Given the size and complexity of the business, the former Trump Cabinet member may partner with multiple technology companies, the people added.

Steve Mnuchin served as Treasury Secretary under former President Donald Trump. AFP (via Getty Images)

A spokesman for President Mnuchin declined to comment. TikTok did not respond to a request for comment.

Secretary Mnuchin has already said publicly that TikTok needs to be “rebuild in the United States” after the acquisition, and insisted on CNBC that China “is open to selling as long as there’s no technology transfer along the way.”

Oracle, the software giant led by billionaire Larry Ellison, a Trump donor, is a natural candidate to join Mr. Trump in his bid, multiple experts told the Post. TikTok has already committed to storing U.S. users’ data on servers run by Oracle as part of Project Texas, a plan to meet national security and user privacy concerns.

Oracle did not respond to requests for comment.

Experts said Oracle is a logical fit for TikTok. Getty Images

When Mr. Mnuchin was Treasury secretary, Oracle nearly acquired TikTok as part of the Trump administration’s effort to force ByteDance to sell. Experts say a deal with Oracle is less likely to be subject to regulatory scrutiny than deals with Big Tech companies like Google, Meta and Apple.

Tobin Marcus, who served as economic adviser to then-Vice President Joe Biden during the Obama administration, said Oracle “makes sense given how much it’s been part of the history of this story.”

Microsoft, a major investor in OpenAI, is also a natural candidate. The Big Tech giant also came close to acquiring TikTok in 2020, but CEO Satya Nadella later said the aborted bid was problematic. “The weirdest thing I’ve ever worked on.”

last month, The Washington Post reported Mnuchin told potential partners that he has been in contact with not only Oracle but also former Activision-Blizzard CEO Bobby Kotick, who has also expressed interest in acquiring the app. It is being

Bobby Kotick is one of the executives reportedly interested in acquiring TikTok. Reuters

Representatives for Kotick did not respond to requests for comment.

With over 170 million users in the US, the app is sure to come with a hefty price tag. Bloomberg Intelligence estimates that the company’s U.S. operations could be worth up to $40 billion, while other companies put the price at more than $100 billion.

Although some critics have blasted Mnuchin’s plan as wild, Andrew Grotto, who served as senior director for cybersecurity policy under Presidents Barack Obama and Donald Trump, says China’s Given the country’s strict export controls on AI, rebuilding the algorithm is “really the only option”.

“I don’t think it’s easy, but I also think there are limits in some ways when you think about appropriate levels of resource spending,” Grotto said. “Whether that product is good, at least not as good as TikTok’s original underlying algorithm, that’s another question. A minimally viable product seems possible.”

Rob Atkinson, chairman of the Information Technology Innovation Foundation think tank and a member of TikTok’s content and safety advisory board, agreed.

TikTok faces the prospect of an outright ban in the US. AFP (via Getty Images)

“I don’t know if this is an irreplaceable algorithm,” Atkinson said. “With all the AI ​​capabilities we have today, we have algorithms that are probably not 100% better, but pretty good, very good, and over time, probably not better than today. So I don’t think that’s going to be a problem.”

Rebuilding the app is just one challenge to Mnuchin’s bid, which would require approval from both the U.S. and Chinese governments.

Marcus said the path to the Senate floor is likely to be difficult and that a vote before the election is unlikely. He noted that calls for a ban grew in March 2023 after TikTok CEO Hsu Chu’s damning testimony on Capitol Hill, but the calls for a ban ended up fading for more than a year. did.

“The Senate doesn’t seem keen on taking the House bill as is and pushing it through, so there’s definitely a possibility that they could make amendments,” Marcus said.

On the other side of the Pacific, critics say Secretary Mnuchin and other potential buyers have a long way to go to get the necessary approvals from the Chinese government, which has repeatedly vowed to prevent forced sales of TikTok. There is.

Steve Mnuchin said he is assembling a group of investors to buy TikTok. FII Institute

One tech executive told the Post last month that if the U.S. government had its way, the Chinese government would see this as “a major insult to its honor and integrity as a sovereign nation.”

Still, the Chinese government may find it difficult to turn down a huge market capitalization deal for TikTok’s U.S. operations — especially after Chinese President Xi Jinping reassures Western business leaders that China is open for business. That’s true when I’m working overtime for the sake of it.

“I think there’s a path for them to come to an agreement. I don’t think Congress is bluffing,” Atkinson said. “You would be significantly devaluing a major Chinese technology company. The Chinese government would be much richer if ByteDance could inject huge sums of money and use it for expansion and other ventures.” I think you realize that.”

Critics have also warned that delaying the timeline for selling or banning TikTok would ensure that the Chinese Communist Party could use the app to interfere in the presidential election. That’s one of the main reasons lawmakers pushed this bill in the first place.

“The longer you remain under the influence of the Chinese government, the more control you will have.” [Chinese President Xi Jinping] “The United States controls the news and information that Americans under 35 consume and digest,” said Chris Fenton, director of the American Institute for Asian Studies. “Helping fair market sales to American buyers as quickly as possible will reward investors, satisfy users, and protect national security interests.”

Sen. Maria Cantwell has indicated that she is open to a longer timeline for selling TikTok. AP

As the Post reported, Senate Majority Leader Chuck Schumer (D-N.Y.) is under pressure to bring the bill to a vote, with some lawmakers arguing that gagging TikTok is a First Amendment right to the Constitution. It has garnered bipartisan support, despite concerns expressed that it could violate or have negative effects. Precedent regarding targeting of specific companies through government law.

Senators are reportedly discussing possible changes to the bill, including extending it by six months and expanding its scope to include social media. Sen. Maria Cantwell (D-Wash.), who chairs the Senate Commerce Committee, reportedly wants to hold at least one public hearing before a vote.

Indeed, the House bill’s tight six-month sale deadline is seen as a major stumbling block to the plan, with 12 to 18 months more realistic for completing a deal that includes rebuilding a working version of the software. This is believed to be the timeline, the people added.

TikTok has vowed to fight the forced sale of the company in court. Getty Images

A potential buyer could seek an agreement that would allow TikTok to continue operating using its current software until the new algorithm is ready to be implemented, even if it means extending beyond the stated sale period. Highly sexual.

Cantwell has expressed support for extending the deadline. tell the reporter “That will be a good guarantee of success.”