ByteDance, the parent company of TikTok, has indicated it would rather do a TikTok shutdown of the app in the United States than sell it if forced by U.S. regulations, according to sources familiar with the matter. This decision comes amid ongoing concerns from U.S. lawmakers regarding the potential for Chinese access to American data via the app in what is now known as the ‘TikTok ban.’
In the latest TikTok ban in US update, the company is facing a new challenge. Legislation recently signed by President Joe Biden could force TikTok to be removed from U.S. app stores unless it is sold to an American company by January 19, with a possible three-month extension. This law arises from fears that the app could be used for surveillance by the Chinese government.
TikTok, while popular in the U.S. with 170 million users, contributes a relatively small portion to ByteDance’s overall revenue and daily active users globally. Sources close to ByteDance stated that the company finds the prospect of a U.S. shutdown more acceptable than compromising on its core operational algorithms by selling them. These algorithms are integral not just to TikTok but to all of ByteDance’s operations, making their sale particularly sensitive.
The algorithms, which are deeply intertwined with ByteDance’s other applications like Douyin, its Chinese counterpart, are considered superior to those of competitors and are viewed as one of the company’s most valuable assets. Given this, divesting TikTok from its algorithms would be complex and unlikely to be considered by ByteDance.
Additionally, any sale of TikTok’s U.S. operations would have to comply with Chinese laws and regulations on technology exports, further complicating potential divestment. This was underscored by statements from China’s Ministry of Commerce, which voiced opposition to a forced sale last year.
As ByteDance navigates these complexities, the situation reflects broader tensions between the U.S. and China over technology and data security. The company’s preference to shut down TikTok in the U.S. rather than do a TikTok sale, highlights the significant hurdles and strategic considerations involved in such a decision.
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