TikTok to Shut Down in U.S. Rather Than Sell, ByteDance Asserts

In a dramatic stance against U.S. regulatory pressures, ByteDance, the Chinese company behind the widely popular TikTok app, has signaled a bold resolve.

by Faruk Imamovic
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TikTok to Shut Down in U.S. Rather Than Sell, ByteDance Asserts
© Getty Images/Chip Somodevilla

In a dramatic stance against U.S. regulatory pressures, ByteDance, the Chinese company behind the widely popular TikTok app, has signaled a bold resolve. According to Reuters, citing unnamed sources, ByteDance would rather shutter TikTok's operations in the United States than sell it, should their legal challenges against a proposed U.S.

ban fail. This revelation underscores the strategic importance ByteDance places on its proprietary algorithms, which are central not only to TikTok but to the company's broader business model.

Algorithm at the Heart of the Issue

The algorithms that power TikTok's addictive video recommendations are deemed crucial by ByteDance and are a key reason why the company is reluctant to part with its U.S.

operations. Despite TikTok contributing only a minor fraction to ByteDance’s overall revenue and user base, losing control over the algorithm by selling the app could pose a significant strategic setback. The company asserts that shutting down TikTok in the U.S.

would limit business impact while safeguarding this critical asset. This situation escalated following President Joe Biden's recent enactment of legislation that mandates TikTok be sold off within the next nine to twelve months, unless ByteDance can demonstrate significant steps toward divestiture.

The legislation is rooted in longstanding concerns among U.S. lawmakers about potential Chinese surveillance and data collection through the app.

Legal Battles and Future Prospects

Amid these turbulent times, TikTok's CEO, Shou Zi Chew, remains defiant and optimistic.

"We are confident and we will keep fighting for your rights in the courts," Chew stated. He believes that the legal arguments and constitutional protections will see the company through to a favorable outcome. The deadline for the sale is January 19, 2025, but provisions for an extension exist if ByteDance can show progress toward complying with U.S.

demands. Complicating matters, a recent report from The Information indicated that ByteDance had been exploring options to sell a majority stake in TikTok's U.S. business, specifically to a non-tech industry buyer, while retaining its algorithm. However, ByteDance has officially denied any plans to sell, calling such rumors "untrue."

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