Confusion AI’s bid for Tiktok could give us the government a 50% stake

WASHINGTON (AP) — Confusion AI has presented a new proposal to Tiktok’s parent company that would allow the U.S. government to own up to 50% of a new entity that merges confusion With Tiktok’s US business, according to a person familiar with the matter.

The proposal presented last week is a revision of A prior plan The artificial intelligence startup had presented to Tiktok’s parent Bytedance on January 18, a day before the law banning Tiktok went into effect.

The first proposal, which Bytedance has not responded to, sought to create a new structure that would merge San Francisco-based Confusion with Tiktok’s US business and include investment from other investors.

The new proposal would allow the U.S. government to own up to half of the new structure once it makes an initial public offering of at least $300 billion, said the person, who was not authorized to speak about the proposal. . The person said the confusion proposal was revised based on feedback from the Trump administration.

If the plan is successful, the shares held by the government would not have voting power, the person said. Nor would the government get a seat on the new company’s board.

Bytedance and Tiktok did not immediately respond to a request for comment.

Under the plan, Bytedance would not have to cut ties with Tiktok completely, a favorable outcome for its investors. But it would have to allow for “full US board control,” the person said.

Under the proposal, the China-based tech company would contribute Tiktok’s US business without the proprietary algorithm that fuels what users see on the app, according to a document seen by The Associated Press. In return, Bytedance’s existing investors will receive equity capital in the new structure that emerges.

The proposal appears to mirror a strategy that Steven Mnuchin, the Treasury secretary during Trump’s first term, discussed Sunday on Fox News’ Sunday morning futures — that a new investor in Tiktok could simply “dilute” the Chinese ownership and satisfy the law. Mnuchin has previously expressed interest in investing in the company.

“But the technology must be disconnected from China,” he added. “It must be disconnected from Bytedance. There is absolutely no way that China would ever let us have something like this in China. “

The divestment proposal comes as several investors express interest In Tiktok. President Donald Trump said late Saturday that he expects a deal to be reached in as soon as 30 days.

On A flight from Las Vegas to Miami on Air Force OneTrump also said he had not discussed a deal with Larry Ellison, chief executive of software maker Oracle, despite a report This Oracle, along with outside investors, considered taking over Tiktok’s global operation.

“Numerous people speak to me. Very significant people,” Trump said. “We have a lot of interest in it, and the United States will be a big recipient. … I would only do it if the United States is assigning. “

Under a bipartisan bill passed last year, Tiktok had to be banned in the US by January 19 if it didn’t cut ties with byte dancing. The Supreme Court upheld the law, but Trump then issued an executive order halting enforcement of the law for 75 days.

Trump, on Air Force One, noted that Ellison lives “right down the road” from his Mar-a-Lago estate, but added: “I’ve never talked to Larry about Tiktok. I have talked to many people about Tiktok and there is a lot of interest in Tiktok. “

Tiktok Close card down In the US a week ago, but went back online after Trump said he would delay the ban. Trump had unsuccessfully attempted a US ban on the platform during his first term. But he has since reversed his position, crediting the platform with helping him win more young voters during last year’s presidential election.

Tiktok CEO Shou Chew attended Trump’s inauguration on Jan. 20, along with some other tech leaders who have forged friendlier ties with the new administration.

Congress voted to ban Tiktok in the US out of concern that Tiktok’s ownership structure represented a security risk. The Biden administration argued in court for months that allowing a Chinese company to control the algorithm that fuels what people see on the app was too much of a risk. Officials also raised concerns about user data collected on the platform.

So far, the US has not provided public evidence that TIKTOK is handing over user data to Chinese authorities or allowing them to think about its algorithm.

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Hadero reported from South Bend, Indiana.