ByteDance prefers shutdown over TikTok sale in US, sources reveal amid legal battle
In a bold move signaling its stance against potential US legislation, ByteDance, the Chinese tech giant behind the viral video-sharing app TikTok, is reportedly prepared to shut down its US operations rather than sell the platform to an American buyer. This decision, if all legal recourse fails, could have far-reaching implications for the future of TikTok in the United States.
Sources familiar with the matter, speaking on condition of anonymity, disclosed that ByteDance views its proprietary algorithms, integral to TikTok’s functionality, as non-negotiable assets crucial to its global operations. As such, the company considers the sale of TikTok with its algorithms highly improbable, preferring instead to cease operations in the US market.
Despite TikTok’s immense popularity among American users, it contributes only minimally to ByteDance’s overall revenue and daily active user base. The company’s priority lies in safeguarding its core technology, even if it means shutting down its US operations.
ByteDance has publicly refuted speculation regarding the sale of TikTok without its pivotal algorithm, addressing the issue through a statement on Toutiao, another media platform owned by the tech conglomerate. This response follows reports by The Information suggesting various sale scenarios for TikTok’s US operations.
In response to the new US legislation, signed into law by President Joe Biden, TikTok CEO Shou Zi Chew expressed confidence in overcoming legal challenges. Chew assured the app’s 170 million American users that they would not face immediate disruptions. The legislation, driven by concerns among US lawmakers regarding potential Chinese surveillance and data access, sets a deadline of January 19 for the sale of TikTok.
While ByteDance does not publicly disclose financial details, it generates the bulk of its revenue from its Chinese applications, such as Douyin, TikTok’s Chinese counterpart. The US market accounted for approximately 25% of TikTok’s total revenues last year, according to a source with direct knowledge.
Assessing TikTok’s valuation proves challenging for financial analysts due to the lack of public financial data, unlike competitors like Meta Platforms’ Facebook and Snap. Nonetheless, ByteDance reported a substantial revenue increase, reaching nearly $120 billion in 2023, up from $80 billion the previous year.
Discussions surrounding TikTok’s future unfold against a backdrop of broader tensions between the US and Chinese technology companies, exemplified by previous attempts to restrict Chinese-owned platforms like TikTok and WeChat. The Chinese government has signaled its likely opposition to any forced sale of TikTok, citing stringent regulations governing the export of technology, including algorithms.
As ByteDance navigates the legal landscape and weighs its options, the fate of TikTok in the US remains uncertain. The outcome of this high-stakes battle will not only shape the future of the popular video-sharing platform but also influence the broader landscape of tech regulation and international relations.
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