TikTok owners say they have no plans to sell US business and ‘would prefer shutdown’

Parent company may refuse to sell the app even without its algorithm, sources say

Vishwam Sankaran
Friday 26 April 2024 09:12 BST
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Related video: TikTok ban: What happens next

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TikTok’s parent company ByteDance would reportedly favour shutting down the app altogether over offloading its business after the US passed a new law forcing it to sell the platform or be banned in the country.

“ByteDance doesn’t have any plans to sell TikTok,” ByteDance said on the social media platform Toutiao, which it owns.

ByteDance would rather shut down the app than sell it if it exhausts all legal options to fight the ban in the US, Reuters reported citing anonymous sources.

After American president Joe Biden signed the bill passed by the Senate into law, reports emerged suggesting that TikTok’s parent company could sell its operations to a US-based company, but without the algorithm that recommends videos on the app.

ByteDance deems TikTok’s algorithm core to its overall operations, including those of its other domestic video-sharing platforms in China.

TikTok has nine months to sell or face ban

The app launched in 2017 and quickly became one of the world’s most popular social media platforms, success that is widely attributed to its unique algorithm, deemed to be better than those of its competitors like Tencent.

Its algorithm has been so successful that rival social media platforms such as Instagram and X – formerly Twitter – have tweaked their designs to incorporate similar features.

The app’s sale in the US along with its secret sauce is unlikely since its intellectual property licence, including its algorithm, is registered under ByteDance in China.

China has previously indicated that it would reject a forced divestment of TikTok during a US congressional hearing.

“China will firmly oppose it...The sale or divestiture of TikTok involves technology export and must go through administrative licensing procedures in accordance with Chinese laws and regulations,” a spokeswoman for the Ministry of Commerce at a news conference in Beijing said last year.

Separating the app’s algorithms from its US assets would also be extremely complicated and ByteDance is unlikely to consider this option, sources told Reuters.

The act signed by Mr Biden sets a deadline of 19 January for ByteDance to sell up, but the deadline could be extended if the company is found to be making progress towards a sale.

The Senate passed the bill amid concerns among US lawmakers that China could analyse the app’s user data to conduct surveillance on American citizens.

The video-sharing app only forms a small share of ByteDance’s overall revenues, meaning the Chinese-owned parent company would be in a position to simply shut it down in the US in a worst-case scenario rather than sell it, Reuters reported.

“Rest assured – we aren’t going anywhere,” TikTok chief Shou Zi Chew said in a video moments after Mr Biden signed the bill.

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