The Impact Of The TikTok Buyout: Forced Sale Of The App Could Have Investors Paying Billions For Nothing

The verdict is out and the TikTok app has been given a limited amount of time to either engage in a forced sale of the platform or face a ban across the US.

But the matter is not as simple as it might appear to many of us. The sale of TikTok to another US-based firm might be the sole means of the platform surviving in the country and even the EU but the impact this can have on those potential buyers is worth a mention.

We’re talking about buyers who are forced to make bids that would have them paying a lot of extra money and not attaining the one thing that they probably were desiring to begin with. And that’s TikTok’s algorithm.

Plenty of top bidders have come to the forefront who have expressed mighty interest in the deal.

This all stems back to March of this year when the House spoke about a major vote that would ban the app from America or have it be forced to undergo a sellout to another American-based firm. The goal was to rid its affiliation with Chinese parent firm ByteDance.

So many senators did not appear to be convinced on this front and therefore a need for legislation was put high on the cards. Hence, America’s DOJ prompted the option for sales instead of taking part in a ban. Biden said yes to the deal and a timeframe of just nine months was given but if necessary, another three-month extension would be provided.

But the platform and a host of other leading content creators are not happy with the news and continue to speak about how it’s the most unconstitutional ban. There is zero certainty that such a platform would be sold in the end and even if it does succeed on that front, investors might find themselves paying extra.

TikTok is one of the most valuable brands out there but one thing that people cannot seem to get over is the massive popularity that surrounds the algorithm. It’s one that is not based on what the user wishes or desires to see but a very intricate and sophisticated system that is designed to unveil the users’ interests which are displayed on the video feed.

This is no longer a 100% driven experience but is designed to follow certain creators and look for content. And then the feed remains to be the main interference. How healthy such an algorithm is continues to get questioned with time. We saw a study from 2022 shed light on the serious concerns this could have. But there is zero doubt about how successful the app can be.

As per analysists, the buyout of TikTok is not the right decision and could result in a disastrous deal. We’re seeing investors pay a staggering sum of money hitting the $100B mark for the app.

Amongst the top names interested in the buyout is Frank McCourt who mentioned in the past week how the goal was to acquire TikTok and bring in more finance experts to assist.

Other big names can include Steven Mnuchin who mentioned how he was also engaging in the assembly for investors that would make bids for the app.

But no matter what, China has made it very clear how there is no room for a sellout of the app’s algorithm to the US and anyone interested in buying would do so with this clause in place.

TikTok added how the government of China made it crystal clear how it wouldn’t enable any firm to sell the algorithm that provided users with recommendations and hence foreign buyers needed to be made aware of it.

This puts a serious limit on some technologies like personal data algorithms too and hence impacts buyers who are paying a lot for not much in return. After all, the social media giant is not worth that much when there’s no algorithm in place.

To put it simply, the famous app is nothing without an algorithm and what you get is just the brand name and the most basic variant. Moreover, it just does not appear to be the most likely route for billionaires to make billions from such a means.

Image: DIW-Aigen

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