ByteDance prefers closing TikTok in the US if legal options fail

Hong Kong. ByteDance, which owns TikTok, would prefer to close its loss-making app rather than sell it if the Chinese company exhausts all legal options to fight legislation banning the platform from U.S. app stores, four sources said.

The algorithms that TikTok relies on for its operations are considered critical to ByteDance’s overall operations, which would make a sale of the algorithm-powered app highly unlikely, sources close to the parent company said.

TikTok represents a small part of ByteDance’s total revenue and daily active users, so the parent company would prefer to close the application in the United States, in the worst case scenario, rather than sell it to a potential American buyer, they said.

A shutdown would have a limited impact on ByteDance’s business, while the company would not have to give up its core algorithm, said the sources, who declined to be named as they were not authorized to speak to the media.

Late on Thursday, in a statement posted on Toutiao, a media platform he owns, he said he had no plans to sell TikTok, in response to an article by The Information that said ByteDance is exploring scenarios to sell the TikTok’s American business without the algorithm that recommends videos to its users.

In response to Reuters’ request for comment, a TikTok spokeswoman referred to ByteDance’s statement posted on Toutiao.

TikTok Chief Executive Shou Zi Chew said Wednesday that the social media company hopes to win a legal challenge to block legislation signed by President Joe Biden that he said would ban its popular short-video app used by 170 million. of Americans.

The bill, passed overwhelmingly in the US Senate on Tuesday, is motivated by widespread concern among US lawmakers that China could access Americans’ data or use the app for surveillance purposes.

Biden’s firm sets a deadline of January 19 for the sale – one day before his term expires – but could extend the deadline by three months if he determines that the private company ByteDance is making progress.

ByteDance does not make public its financial results or the financial details of any of its units. The company continues to make most of its revenue in China, primarily from its other apps, such as Douyin, the Chinese equivalent of TikTok, according to independent sources.