TikTok Shutdown Preferred Over US Sale by ByteDance Amid Legal Wrangling

In the worst-case scenario, if all else fails and ByteDance ends up losing the US ban fight, it would be better for it to delete the app rather than sell it, four sources said. The sale of TikTok would be unlikely because the algorithms on which its operations are based make up the core of ByteDance’s business.

Those same sources said TikTok contributes minimally to the revenues and user base ByteDance has outside of China, so a shut-down in the U.S. would be preferable for the parent company to sell to an American buyer. A shutdown would have little impact on ByteDance’s business while maintaining control of its core algorithm.

The company has doubled down on its stance of not selling TikTok in speculation to offload its US business without the algorithm. TikTok CEO Shou Zi Chew expressed confidence in the judiciary’s ability to overturn President Joe Biden’s ban.

A bipartisan concern in the U.S. Senate over data security hastened the law that would ban TikTok due to fears of Chinese surveillance. Biden’s signing set a January 19 deadline for sale, which could be extended by three months if ByteDance shows some progress.

Although ByteDance’s finances remain confidential, reports indicate that its sales reached $80 billion in 2022 and surged to nearly $120 billion in 2023. Daily active users on the U.S.-based TikTok account for about 5% of ByteDance’s global users. ByteDance shares its core algorithms with its Chinese siblings, making their divestiture impractical and unlikely.

Selling TikTok’s U.S. assets without the algorithms included may prove more difficult, adding more complexity to ByteDance’s situation under regulatory scrutiny and geopolitical tensions.