TikTok owner, ByteDance prefers to shutdown in US if legal options fail

TikTok has taken the entertainment industry and the social media world by surprise. If ByteDance, the company that owns TikTok, uses all of its legal options to oppose legislation that would remove the platform from U.S. app stores, the Chinese business would sooner close down its loss-making app than sell it, according to four people.

According to reports, the algorithms TikTok uses to run its business are seen to be essential to the company’s entire operations, making the sale of the app doubtful. The parent company of ByteDance stated that, in the worst situation, they would prefer to have the app shut down in the United States rather than sell it to a potential American buyer because TikTok only contributes a small portion of ByteDance’s daily active users and total earnings.

The individuals, who wished to remain anonymous because they were not permitted to speak to the media, claimed that a shutdown would have little effect on ByteDance’s operations and that the company would not have to give up its basic algorithm.

In response to an article published by The Information stating that ByteDance is considering options for selling TikTok’s U.S. business without the algorithm that suggests videos to TikTok users, the company announced late on Thursday that it had no plans to sell the video platform. The statement was posted on Toutiao, which it owns. A TikTok representative cited ByteDance’s Toutiao statement in response to a Reuters request for comment.

CEO of TikTok Shou Zi Chew stated on Wednesday that the social media business anticipates winning a court battle to overturn a rule signed by President Joe Biden that, among other things, outlaws the company’s well-known short video app, which is used by 170 million people in the United States. Congressmen in the United States are deeply concerned that China may obtain American data or utilise the app for spying purposes.

Reuters indicated that this concern is what led to the bill’s overwhelming approval by the Senate on Tuesday. One day before his tenure is about to end, on January 19, Biden’s signing sets a deadline for a sale. However, if he finds that privately held ByteDance is moving forward, he may decide to extend the date by an additional three months.

ByteDance does not make available to the general public the financial information of any of its units or its own performance. According to multiple sources, the company still generates the majority of its revenue in China, mostly from its other apps like Douyin, which is TikTok’s Chinese version. A different source with direct information stated that approximately 25% of TikTok’s total revenue came from the United States last year.

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