ByteDance, the Chinese owner of the popular video-sharing app TikTok, would rather shut down its US operations than sell it if all legal avenues to counter a new US law fail.
Four sources familiar with the matter revealed the development according to Reuters.
The new legislation could potentially ban the app from US app stores. The sources, who spoke on condition of anonymity, underscored that the algorithms essential to TikTok’s functionality are integral to ByteDance’s global operations, making their sale highly improbable.
Despite TikTok’s massive popularity, it contributes minimally to ByteDance’s total revenue and daily active users.
The company, according to the sources, prefers a shutdown over relinquishing its core technology to a potential American buyer.
They emphasized that such a move would have a limited impact on ByteDance’s broader business while preserving its proprietary algorithm.
The company openly refuted claims of any intention to sell TikTok, particularly without its pivotal algorithm, through a statement on Toutiao, another media platform owned by ByteDance.
This was in response to speculative reporting by The Information about possible sale scenarios for TikTok’s U.S. operations.
In a bid to confront the new US legislation, which was signed into law by President Joe Biden and sets a January 19 deadline for the sale, TikTok CEO, Shou Zi Chew expressed confidence in overcoming the legal challenges.
Chew assured that the popular app, which boasts 170 million American users, would not face immediate disruptions. The legislation stems from ongoing concerns among US lawmakers regarding potential Chinese surveillance and data access through the app.
ByteDance, which does not publicly share its financial details or those of its subsidiaries, continues to generate the majority of its revenue from its other applications in China, such as Douyin, the Chinese counterpart to TikTok. The US market accounted for approximately 25% of TikTok’s total revenues last year, according to a source with direct knowledge.
Financial analysts find it challenging to assess TikTok’s valuation due to the lack of public financial data, especially when compared to competitors like Meta Platforms’ Facebook and Snap. Nevertheless, ByteDance reported a significant increase in revenue, reaching nearly $120 billion in 2023, up from $80 billion in 2022.
The discussions about TikTok’s future come amid broader tensions and previous attempts by the US to restrict Chinese technology companies, such as the unsuccessful bans proposed by the Trump administration against TikTok and WeChat.
The Chinese government has indicated its likely opposition to any forced sale of TikTok, citing stringent laws that regulate the export of technology like algorithms.
This content was created with the help of an AI model and verified by the writer.