TikTok might shut down for real, as the owner apparently rejects selling the app

If everything else fails, ByteDance – TikTok's parent company – might decide to shut down its popular app in the US.

"Everything else" means all legal options to fight the bill that was recently signed by Biden that forces TikTok to be sold to a US-based actor or get banned.

An exclusive report from Reuters quotes four sources who said that TikTok owner ByteDance would prefer to shut down its app rather than sell it.

If this is true, it means that it doesn't matter – not in the slightest bit – if you have no problem with the Biden administration forcing a foreign company to sell its product to a US-based company. If you're the kind of person who just wants the endless TikTok feed and you don't care about who owns the app, tough luck. The owner would rather shut down than sell.

According to the unnamed sources (they're close to ByteDance), the algorithms crucial for TikTok's operations are integral to ByteDance's overall functioning. This makes a sale of the app along with its algorithms…. highly improbable.

The exclusive also mentions that TikTok represents only a small portion of ByteDance's total revenues and daily active users. This apparently leads the parent company to favor shutting down the app in the U.S. as a worst-case scenario rather than selling it to a potential American buyer.

The unnamed sources stated that "a shutdown would have limited impact on ByteDance's business, while the company would not have to give up its core algorithm". ByteDance declined to comment on the matter so far.

The battle plans

TikTok's CEO Shou Zi Chew expressed confidence recently that the social media company would prevail in a legal challenge against legislation signed into law by Biden.

The bill, passed overwhelmingly by the US Senate, reflects concerns among US lawmakers about potential Chinese access to Americans' data or the app's use for surveillance. Biden's signing sets a deadline for a sale on January 19, one day before his term ends, although he could extend it by three months if ByteDance shows progress.

ByteDance does not publicly disclose financial performance details, including those of its units, but sources suggest that most of its revenue comes from China, primarily from apps like Douyin.

According to two of the sources, ByteDance's revenues in 2023 rose to nearly $120 billion from $80 billion in 2022. Additionally, one source noted that TikTok's daily active users in the US make up approximately 5% of ByteDance's worldwide daily active users.

According to the report, TikTok shares its core algorithms with ByteDance's domestic apps like the short video platform Douyin. Additionally, one of the sources stated that these algorithms are considered superior to those of ByteDance's rivals such as Tencent and Xiaohongshu.

The sources highlighted that divesting TikTok along with its algorithms would be unfeasible due to the intellectual property license being registered under ByteDance in China.

Furthermore, the sources emphasized that the process of separating the algorithms from TikTok's US assets would be exceedingly complex, leading ByteDance to unlikely consider this option.