The U.S. Senate on Tuesday passed legislation requiring popular social media app TikTok to be divested from its Chinese parent company ByteDance or excluded from the U.S. market. The move was part of a $95 billion foreign aid package, including military assistance to Ukraine, Israel and Taiwan, that has now been approved by Congress and is headed to President Joe Biden’s desk.
ByteDance, which owns TikTok, would rather shut down its loss-making app 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. Image Internet
Hong Kong. The algorithms that TikTok relies on for its operations are seen as critical to ByteDance’s overall operations, which would make a sale of the app with algorithms highly unlikely, sources close to the parent company said.
TikTok accounts for a small portion of ByteDance’s total revenue and daily active users, so the parent company would rather shut down the app in the U.S., at worst, than sell it to a potential U.S. 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 because they were not authorized to speak to the media.
Late on Thursday, in a statement posted on Toutiao, a media platform it owns, it said it had no plans to sell TikTok, in response to an article by The Information that said ByteDance is exploring scenarios to sell TikTok’s U.S. 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 into law by President Joe Biden that he said would ban its popular short-video app used by 170 million Americans.
The bill, which passed by an overwhelming majority in the U.S. Senate on Tuesday, is prompted by widespread concern among U.S. lawmakers that China could access Americans’ data or use the app for surveillance purposes.
Biden’s firm sets Jan. 19 as the deadline for the sale — a day before his term expires — but could extend the deadline by three months if it 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 derive most of its revenue in China, mainly from its other apps, such as Douyin, the Chinese equivalent of TikTok, according to independent sources.