ByteDance, a Chinese company behind TikTok, is reportedly willing to shut down its operations in the United States rather than sell the popular app, according to sources cited by Reuters on Thursday.
Insiders close to ByteDance stated that the algorithm that TikTok operates on is considered the core of the company’s overall operations, making the possibility of selling an algorithm-based application very slim.
They mentioned that TikTok’s contribution to ByteDance’s total revenue and daily active users is relatively small, leading the parent company to prefer shutting down the app in the U.S. rather than selling it to potential American buyers in the worst-case scenario.
Sources noted that the impact on ByteDance’s business would be limited if TikTok were to be shut down, and the company would not have to relinquish its essential algorithm. The informant, who could not provide a name due to lack of authorization for media interviews, refused to be identified.
ByteDance declined to comment on the matter.
Later on Thursday, ByteDance issued a statement on its media platform Toutiao, asserting that there were no plans to sell TikTok in response to a previous report by The Information.
The report suggested that ByteDance was exploring options to sell TikTok’s U.S. business without the recommendation algorithm.
TikTok CEO Shou Zi Chew posted a video on the platform on Wednesday, expressing confidence in winning the legal battle to prevent legislation signed by President Biden. He also emphasized the platform’s defense of American values and rights.
Xi Van Fleet, a witness of the Cultural Revolution and Chinese American, found irony in Chew’s video.
“Would TikTok’s CEO Chew dare to demand Xi Jinping allow free speech on Douyin (the Chinese version of TikTok)? Of course not. He knows he would ‘disappear’ overnight.
“The war between a communist totalitarian regime and a free country is always asymmetric. Communists use freedom to end freedom. They use rights to end rights. They use democracy to end democracy.”
According to a previous report by Politico, three congressional staffers confirmed that the Chinese Embassy lobbied and attempted to interfere with U.S. legislation related to TikTok during closed-door meetings. Ironically, Chinese diplomats emphasized that TikTok is a Chinese company, while TikTok itself tries to avoid the Chinese label.
The U.S. Senate overwhelmingly passed a package bill on Tuesday, including a requirement for TikTok to be sold. American lawmakers are generally concerned that the Chinese Communist Party could exploit TikTok to access American data or for surveillance purposes.
Once the President signs the legislation into law, the deadline for TikTok to be sold is set for January 19, 2025, the day before the end of Biden’s term. If the next president determines progress has been made on the sale, the deadline can be extended by three months.
ByteDance has not disclosed its financial performance or any financial details of its departments publicly. According to sources, most of the company’s revenue still comes from China, mainly from other apps such as Douyin.
Another source mentioned that the U.S. market accounted for about 25% of TikTok’s total revenue in 2023.