ByteDance Prefers TikTok Shutdown in US if Legal Options Fail, Sources Say

ByteDance Prefers TikTok Shutdown in US: ByteDance would rather shut down its loss-making app than sell it if legislation to ban it from U.S. app stores is enacted.

Due to the app's reliance on TikTok's algorithms, it is unlikely to be sold.

ByteDance's parent would rather shut down TikTok in the U.S. in a worst-case scenario than sell it to a potential American buyer, they said.

According to the sources, ByteDance's business would not be adversely affected by a shutdown, and the company would not be forced to give up its core algorithm.

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As a response to an article by The Information stating ByteDance is exploring the possibility of selling TikTok's U.S. business without the algorithm that recommends videos to TikTok users, it said late Thursday in a statement posted on Toutiao, a media platform it owns, that it had no plans to sell TikTok.

A TikTok spokesperson referred Reuters to ByteDance's Toutiao statement in response to a question from Reuters.

On Wednesday, TikTok's CEO Shou Zi Chew said that the social media company expects 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.

The U.S. Senate passed the bill overwhelmingly on Tuesday in response to widespread concerns that China might access Americans' data or use the app to monitor them.

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Whether he extends the deadline by three months will depend on whether he determines privately owned ByteDance is making progress before Biden's term ends Jan. 19.

Separate sources have indicated that ByteDance continues to make most of its money in China from its other apps such as Douyin, the Chinese equivalent of TikTok.

Approximately 25% of TikTok's overall revenue came from the U.S. last year, according to a separate source.

Reuters says TikTok's financials aren't public or easy to access, so valuing the company is hard.

TikTok's DAUs in the U.S. make up about 5% of ByteDance's global DAUs by 2023.

In fact, TikTok's algorithms are better than those of ByteDance's rivals Tencent and Xiaohongshu, but ByteDance won't release its "secret source"

China would likely reject a forced divestment of TikTok, and the sale of the app would require a license.

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