TikTok’s buyout could cost $100 billion even without the algorithm

TikTok is facing a nationwide ban in the US, and possibly Europe as well. An acquisition by an American company could be the only way for the popular video app to continue its operations in the United States. However, a sale can have serious consequences for the user experience. ByteDance will reportedly not sell its core algorithm that makes the platform, currently estimated to be worth $100 billion, special.

The TikTok buyout does not include the powerful algorithm

After years of thinking about it, the US government is officially pursuing a nationwide ban on TikTok. President Joe Biden signed the bill into law last month after the bill was overwhelmingly passed by Congress. The new law enforces a ban on the app unless its Chinese parent company ByteDance sells it to an American company or group of investors. There is until January 2025 to make a decision on this.

The Justice Department ideally wants ByteDance to sell the American branch of TikTok instead of enforcing a ban on the app. This would ensure continued access to the app for US users while addressing security concerns. However, the Chinese company does not want to sell TikTok. It has challenged the law in court, calling it an “unconstitutional” law that violates citizens’ First Amendment rights.

A group of TikTok creators have also filed a similar lawsuit. They all want the court to block the law so that the platform can continue its activities in the country. It has requested an expedited trial and a ruling in the first week of December. But if the ruling is in conflict, ByteDance may have to sell TikTok and make some money from it instead of shutting it down for nothing.

If industry estimates are accurate, it wouldn’t be a small amount. We may be dealing with a scandalous takeover costs as much as $100 billion. Even then, TikTok may not give away a key element that plays a major role in its success: its algorithm. The platform has a very advanced algorithm that determines what kind of videos you might want to watch.

A few names have already emerged as potential candidates

Like other video apps, TikTok allows users to follow their favorite creators and watch their videos. They can also search for a specific video or topic. However, the algorithm-driven recommendation feed is the primary interface. The Chinese government has reportedly done this has blocked ByteDance from including this powerful algorithm in any TikTok buyout deal in the US.

However, potential buyers are not deterred by this. Among the names that have emerged as potential suitors is real estate billionaire Frank McCourt. He is currently gathering a group of investors to buy TikTok and putting together their bid for the app. They have yet to formally contact ByteDance for a TikTok buyout. Former Activision CEO Bobby Kotick and former Treasury Secretary Steven Mnuchin are also interested in the app.

“Of course TikTok isn’t worth much without the algorithm. I get it. That’s pretty obvious,” McCourt said. “But we’re talking about a different design, one that requires people to move beyond the mindset and paradigm we’re in now.” McCourt likely believes he can rebuild the technology and give TikTok users in the US the same experience as before. But the bigger question is whether ByteDance will sell the platform. We may not get answers anytime soon.