Kevin O'Leary says his interest in purchasing TikTok stems from the millions of small businesses using the platform but thinks its valuation has fallen ahead of a potential ban of the platform in the U.S.
O'Leary, the chairman of O'Leary Ventures, took to LinkedIn Wednesday offering to buy assets from TikTok’s owner ByteDance Ltd. to form a new U.S. company. His comments came after the U.S. House of Representatives passed a bill that could lead to a ban on the platform if its Beijing-based owner doesn’t sell its stake.
“So a lot of moving parts on this deal, (it’s) really complicated, but a very interesting business with about 170 million users… But more importantly, five million small businesses use it to acquire customers, sell goods and services and advertise on it. That's where I'm focusing,” O'Leary said in an interview with BNN Bloomberg on Thursday.
Despite the vast number of small businesses using the platform, he said there are also valuation metrics to consider.
“Whatever it was worth two days ago, it’s worth 50 to 60 per cent less today. There's so much uncertainty around this asset, particularly what the covenants are going to be post-sale,” O'Leary said.
“This is going to be a highly regulated industry at some point. And really the headline focus will be on TikTok because of all of the controversy around collection of user data.”
He said his interest in potentially buying the social media platform began in 2020, and noted that the company has been “up for sale multiple times” with previous interest from Walmart, Oracle and Microsoft.
“It's been a well-known issue regarding national security, but this time it's different because this bill is a bipartisan bill that has passed its first step in the House. It now moves on to the Senate. It's just a timing issue,” O'Leary said.
The bill was passed in a 352-65 vote in the U.S. House and will now go to the Senate. U.S. President Joe Biden has stated he will sign the legislation if Congress passes the measure.
O'Leary outlined in his initial LinkedIn post that issues regarding data on the platform “won’t go away.” He added that Tiktok “leaks data” to the Chinese Communist Party and needs to be sold.
“I’m proposing purchasing these assets into a new American company,” O'Leary said in the post.
“I’ll guarantee the servers are on American soil. I guarantee we’ll close the Chinese back doors in the code. I’ll guarantee it’s safe for users, small businesses and large businesses. It will be an American company!”
As O'Leary angles to buy the popular video platform, others have also expressed their interest. On Thursday, former U.S. Treasury Secretary Steven Mnuchin said he is going to put together a group of investors to purchase TikTok.
With files from the Associated Press.