Investor explains why he thinks TikTok will be safer with U.S. ownership

Geoff Bennett:

Congressional lawmakers today told Apple and Google they must be ready to remove TikTok from their U.S. app stores on January 19.

Last week, a U.S. federal appeals court upheld a law requiring TikTok's parent company, ByteDance, to sell it in the U.S. or face a ban. The app is used by 170 million Americans, and lawmakers argue that the Chinese government's relationship with TikTok's parent company threatens data privacy and national security.

As the deadline grows closer, there are lots of questions about what will happen to the app or who could buy it.

Joining us now to discuss that is Frank McCourt, who's leading a group of investors to try to buy the U.S. part of TikTok. He's executive chairman of McCourt Global.

Thanks for being with us.

Frank McCourt, Executive Chairman, McCourt Global:

Hi, Geoff. How are you?

Geoff Bennett:

Doing well. Thanks.

So TikTok's Chinese parent company, ByteDance, says it has no plans to sell the app and the Chinese government, as I understand it, is unlikely to approve the sale of TikTok's U.S. business. So why do you see an opening here?

Frank McCourt:

Well, we have said all along that we believe the government's case would be upheld. It was a week ago today. And we believe, when push comes to shove, that the app will be sold.

It won't be sold, however, with the Chinese algorithm. And I think that's really the key point. China's made it clear that that's national intellectual property. They're not selling it. And we're one of the few, if not the only, bidder that is interested in buying U.S. TikTok without the algorithm. We have a full, clean, made-in-America stack ready to go to migrate the user base over to it.

So we think a — there's a high likelihood that there will be a sale. We could be wrong and it may be shut down. But I hope it's not shut down. The user base of TikTok hopes it won't be shut down. And, of course, president-elect Trump has said he doesn't want to see a ban either.

Geoff Bennett:

What conversations have you had with the president-elect or members of his team about this?

Frank McCourt:

We're just opening up those lines of communication now, now that the judges made their ruling and the deadline is set.

And so we are — we just want to make sure that the president-elect knows that there's an alternative here that's a real win-win. And, by that, I mean that the Chinese government can win because they can keep their algorithm. President-elect Trump can fulfill a desire and a commitment to stop the app from being banned.

The American citizens and America can be protected and we can remove the national security threat. And, of course, the user base on TikTok can continue to enjoy the platform.

Geoff Bennett:

Without that algorithm, that proprietary code that makes the app so effective at predicting what kinds of videos users want to see, without that special sauce, doesn't that make TikTok certainly less valuable, but also less desirable?

Frank McCourt:

Yes, that is a good point. It does make it — the U.S. TikTok less valuable.

And the algorithm is great. But, as I say to people, so is democracy. So is civil discourse. So is an information ecosystem that gets us all smarter. And so is protecting kids. So the point here is, we want to move the user base of TikTok over to a new stack that is not driven by a top-down algorithm.

And what I mean by that is, the current tech architecture is one where we're all surveilled, our personal data is scraped and aggregated, algorithms are applied, and then we're — we're manipulated, quite frankly. And this is the national security threat that's become obvious now and why Congress moved so quickly.

We don't want the algorithm, nor do we need it. We think the Internet should not be architected in that way and that there should be a new upgraded Internet, where each of us own and control our identity, our data, our relationships, and we get to curate our own algorithm.

Geoff Bennett:

Another practical question about how this might work.

China changed its laws back in 2020, as you well know, allowing it to block the sale of Chinese technology to an American buyer. How would you get around that? Have you had any conversations with Chinese officials in Beijing?

Frank McCourt:

We have reached out for ByteDance. We'd like to have a conversation with them.

But, again, we're not buying the back end here. We're not interested in replicating a top-down technology that takes advantage of American citizens. We're actually — we'd like to stop the exploitation and empower American citizens. We think this TikTok problem is a moment to turn it into an opportunity to actually use this moment to catalyze an alternative, upgraded Internet, and then let people choose.

They can choose an Internet where they're surveilled and their data is scraped and in exchange they get, what, a free app, or an Internet where they can be empowered, they can be in charge of themselves, reclaim their personhood, their data, and own it, control it, and actually receive value for it.

Geoff Bennett:

So what might a user experience in this idealized version of TikTok that you're describing?

Frank McCourt:

Be a very, very similar experience in terms of what the app looks like and feels like and how it's used. But the — in this new version, let's call it TikTok 2.0, the user will be in charge of their data. They will be able — they will own their relationships. They will be able to actually monetize their data.

Before we made this bid, I took a write out to Malibu, California, and had dinner with 20 of the biggest influencers and creators on TikTok. I wanted to know what they thought about the app and how it might be improved. And we learned from them a few things.

And what we learned is that they're not thrilled with how it works, because they don't understand why some of the content they put on TikTok goes viral and they become famous, and other very similar content that they put on TikTok doesn't go viral. It's — and because it's a black box algorithm, they have no idea what is working and why.

And, more importantly, they don't know who their community is.

Geoff Bennett:

Well, this January deadline is fast approaching.

Frank McCourt, thank you for joining us this evening. We appreciate it.

Frank McCourt:

And you're welcome. Thank you.