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Chinese Owner of US TikTok Would Rather Shut It Down Than Sell It

Chinese Owner of US TikTok Would Rather Shut It Down Than Sell It

TikTok owner ByteDance would rather shut down the U.S. version of the social network than sell it to a U.S. company, according to a Reuters report.

A bill signed into law by President Biden on April 24, 2024, requires TikTok owner ByteDance to sell the social media network or face a ban in the United States. The company has nine months to comply, although there could be a possible three-month extension if a deal is in the works.

Reuters says four unspecified sources say that ByteDance will not sell TikTok or divest itself from the platform, as selling the platform would require ByteDance to also sell the algorithms that power both TikTok and the company’s other businesses.

TikTok represents only a small piece of ByteDance’s operations. Shutting the social media platform down in the US would have a limited impact on ByteDance, and it would be able to retain its algorithms.

TikTok shares the same core algorithms with ByteDance domestic apps like short video platform Douyin, three of the sources said. Its algorithms are considered better than ByteDance rivals such as Tencent and Xiaohongshu, said one of them.

It would be impossible to divest TikTok with its algorithms as their intellectual property licence is registered under ByteDance in China and thus difficult to disentangle from the parent company, said the sources.

Moreover, separating the algorithms from TikTok’s U.S. assets would be an extremely complicated procedure and ByteDance is unlikely to consider that option, the sources added.

Reuters said that US users represented around a quarter of TikTok’s global revenues in 2023. Two of Reuter’s sources said that ByteDance revenue for 2023 was almost $120 billion, meaning TikTok earned approximately $30 billion for that year.

According to Reuters, former US Treasury Secretary Steven Mnuchin is reportedly considering forming an investor group to buy the company.