Post-CES, we’re gearing up for a rash of earnings in two weeks and lots of corporate news, to be sure, in the next week. 

As always, I’m focused on three things:
1) Technology-driven change;
2) the latest in innovation and startup trends, and;
3) stock fraud.

In This Note:

• TikTok: On The Clock & On The Block 

• Upcoming

• Epistrophy In The News

• My Plans This Week

TikTok: On The Clock & On The Block 

The biggest story in technology this week is undoubtedly the looming Supreme Court decision about the future of TikTok in the United States. 

I began my TikTok journey a little over a year ago, launching a channel to put up snippets of my industry research with the basic idea that I need to tell stories where the people are – not where I want them to be. It’s been a fun challenge to figure out how to be smart, immediate, true to the form but true to the information I’m trying to convey. In other words, it’s like any other writing.  

My channel has been surprisingly successful. I write detailed research reports, white papers, publish short videos on YouTube and release even shorter versions on YouTube Shorts, Instagram and TikTok. And, shocker, my TikTok’s often get the most clicks – maybe that’s just the Chinese Army trying to get my 60 second take on the AI systems at Palantir or the scandal at SuperMicro (I’m sure this is going in my “permanent folder” in Beijing.)

But this medium is too big and too powerful to just go away. My prediction is that a buyer or two will emerge in the next week. Here’s my take on a few that I think we’ll see.

I think we’ll see tech and media giants vying for control of its coveted algorithm and 170 million American users, with ByteDance scrambling to secure a deal that we think could value TikTok’s US business at up to $77 billion. But with every passing day, that price will go down as ByteDance faces the prospect of losing this business for nothing. 

This valuation might seem nuts, but reports put TikTok’s US revenues at $7.74 b in 2024, growing at 25% a year. At a 10x price-to-revenue the US unit might just fetch that, reflecting TikTok’s explosive growth.

Here’s a breakdown of the key contenders and their strategies in the battle for what could be the tech deal of the decade:

1. Project Liberty

Project Liberty, led by real estate tycoon Frank McCourt, has pledged $500 million toward decentralizing the internet and promoting data sovereignty. The initiative has reportedly secured $20 billion in commitments from high-net-worth individuals and family offices.

However, McCourt’s plan to migrate TikTok’s user base to a blockchain-based infrastructure comes with a major catch: ByteDance refuses to include TikTok's prized "For You" recommendation algorithm in the deal. Without this critical asset, rebuilding a comparable AI-driven ecosystem at TikTok’s scale could prove a herculean task.

The proposed deal offers ByteDance the optics of an all-cash transaction, potentially avoiding the perception of a "fire sale." Still, the absence of the algorithm could significantly impact TikTok's ability to maintain its engagement metrics—users currently spend 95 minutes per day on the app, far surpassing rivals like Instagram (50 minutes) and YouTube (45 minutes).

2. Oracle (ORCL: NYSE)

Database giant Oracle reemerges as a contender after its 2020 bid to become TikTok's "trusted technology provider" fell through. Oracle's primary interest lies in integrating TikTok’s US data operations into its cloud infrastructure.

With a market cap of $240 billion, Oracle would need to fund any acquisition through a mix of cash, stock, and debt financing. However, convincing shareholders (shareholders like me) to greenlight a deal that might exceed $70 billion could be a tough sell, given Oracle’s history of mixed results with large acquisitions. A more plausible route might be a commercial partnership, locking in TikTok's cloud business rather than outright ownership.

3. Farvahar Partners / 1789 Capital

These boutique investment firms, led by politically connected figures Omeed Malik and Donald Trump Jr., lack the capital to acquire TikTok outright but could play a pivotal role as deal brokers. Both firms have ties to conservative investors eager to “Americanize” TikTok’s governance, and of course, have the ear of the incoming President. 

While they might end on “on the right” of such a deal (see what I did there?) I think it’s much more likely to see Farvahar Partners offering secondary sales of private companies like SpaceX and X.ai, given Malik and Trump’s ties to Elon Musk. That said,  these guys are certain to emerge as the administration's banker and Venture Capitalists of choice. 

4. Walmart (WMT: NYSE)

Retail behemoth Walmart has expressed interest in TikTok since 2020, envisioning it as a key driver of its social commerce strategy. Walmart’s brand partnerships, shoppable livestreams, and growing ad presence on TikTok highlight its ambitions to capitalize on the app’s 1.2 billion monthly active users globally.

Acquiring TikTok would align with Walmart's e-commerce goals but come with a hefty price tag. With a market cap of $400 billion, Walmart would need external financing, possibly from sovereign wealth funds. Such a bold move would represent a strategic pivot for a company traditionally conservative in its investments.

5. X (Elon Musk)

Not gonna happen. Elon Musk's tumultuous $44 billion takeover of Twitter has resulted in a dumpster fire, and cost his investors billions.. Twitter’s financial struggles—losing $4 million daily—and Musk's erratic leadership make another acquisition infeasible. Moreover, anti-trust concerns would likely block Musk from controlling both TikTok and Twitter, giving him disproportionate power over global media.

6. Meta (META: Nasdaq)

TikTok is an ideal acquisition target for Meta, but even Trump’s anti-trust regulators would never allow it. With Meta already under scrutiny for monopolistic practices, acquiring TikTok would almost certainly face insurmountable legal challenges.

7. Shark Tank’s  Kevin O’Leary

O'Leary has also thrown his hat into the TikTok bidding ring, but, c’mon. Let’s be serious?

O'Leary, known for his brash on-screen persona as "Mr. Wonderful," has claimed to have assembled a consortium of unnamed investors ready to pony up $20-$30 billion for TikTok's US operations. The Canadian reality TV star has positioned the gambit as a patriotic move to “save” the app from Chinese influence and create a “defining moment” for American innovation.

But O'Leary's track record in the tech world is spotty at best. His early software venture, SoftKey, went public in a much-hyped IPO in 1993 before crashing spectacularly amid allegations of accounting fraud. More recently, O'Leary served as a paid spokesperson for the doomed crypto exchange FTX, whose epic collapse last year vaporized billions in customer deposits. That debacle led to an investor lawsuit accusing O'Leary of promoting FTX without disclosing the extent of his financial ties.

With that checkered past as prologue, many observers view O'Leary's TikTok ambitions as little more than a publicity stunt. I do.

The Algorithmic Wild Card

The crux of TikTok’s value lies in its recommendation algorithm, which ByteDance has adamantly refused to sell. This technology, protected as a "strategic asset" by Chinese regulations, remains the key to TikTok’s unparalleled engagement metrics. Any acquirer must either negotiate a workaround or develop a comparable alternative—an expensive and time-intensive undertaking.

ByteDance’s “Project Texas” proposal, which would localize TikTok’s US data on domestic servers, is not going to cut it as a compromise to assuage national security concerns without a full sale.

While ByteDance faces mounting pressure, it still has leverage. The political and logistical challenges of enforcing a nationwide ban could incentivize a settlement, particularly given TikTok’s ubiquity among young Americans (43.4% of users are Gen Z, according to eMarketer). Ultimately, the battle for TikTok is as much about geopolitical rivalry as it is about financial opportunity, underscoring the app’s central role in the evolving global tech landscape.

Upcoming

Epistrophy In The News

Connell McShane and the fine folks at NewsNation (you know who you are) had me on midweek to talk about the amazing capitulation of Mark Zuckerberg and Meta, ahead of an April 15 FTC trial for antitrust. And of course there was some Elon Musk thrown in there, because, why not.  

My Plans This Week

I’m available all week and would love to expand on the thoughts above, though I’ll be busy with some client meetings and JP Morgan Conference hijinx. 

I hope these notes are helpful to you. I’d love to discuss them further and, as always, comments, questions and ideas are appreciated.