ByteDance, the Chinese tech giant behind the popular video-sharing app TikTok, is reportedly facing a crucial decision regarding the platform’s future in the United States. According to sources close to the company, ByteDance would prefer to shut down TikTok rather than sell it if all legal avenues to challenge a US ban are exhausted. This stance comes despite increasing interest from American buyers in acquiring the platform.
One of the main sticking points in any potential sale is the core algorithms that TikTok relies on for its operations. These algorithms are considered integral to ByteDance’s broader operations, making a sale of the app with its algorithms highly unlikely, according to insiders.
TikTok’s CEO, Shou Zi Chew, has vowed to wage a legal battle against the US government’s actions. President Joe Biden recently signed a law requiring ByteDance to sell TikTok within 270 days or face a ban. However, ByteDance has refuted reports suggesting it was exploring scenarios for selling TikTok’s US business without including the algorithm.
In a statement posted on Toutiao, a media platform owned by ByteDance, the company affirmed that it has no plans to sell TikTok. Despite TikTok representing a small share of ByteDance’s overall revenues and daily active users, sources indicate that a shutdown would have limited impact on ByteDance’s business, allowing the company to retain its core algorithm.
The debate surrounding TikTok’s future in the US revolves around concerns over national security and Chinese surveillance. Some US lawmakers have alleged that TikTok’s algorithms could enable third parties in China to spy on American users, posing a threat to national security. TikTok has expressly denied these allegations, asserting that the US government’s efforts to ban the platform are ill-founded and it has never shared user data with the CPP.
Although ByteDance has dismissed the possibility of a sale, reports suggest that wealthy American financiers and tech executives were preparing multibillion-dollar bids to acquire TikTok. Among those looking to potentially purchase the app include former treasury Secretary Steven Mnuchin, Activision Blizzard’s former chief Bobby Kotick, Pershing Square hedge fund manager Bill Ackman and “Shark Tank” titan Kevin O’Leary.
However, ByteDance seems intent on adhering to China’s Commerce Ministry’s stance, which resolutely opposes the sale of the platform.
However, If TikTok were to be banned in the US, it would face significant operational challenges. App stores operated by companies like Apple and Google would be subject to civil penalties if they continued to distribute the application. Additionally, the app would lose its ability to update on US phones, rendering it incompatible with the latest versions of iOS and Android. The bill would also force internet service providers to shut down access to TikTok, making it unusable on devices where it has already been downloaded.
The potential ban on TikTok in the US mirrors actions taken by the Indian government, which banned the app citing similar national security concerns. For the time being, TikTok hopes to overturn Congress’ ultimatum in court, arguing that it is unconstitutional and a form of flagrant government overreach.