ByteDance would rather shut down TikTok in US than sell it: Report

Ultimatum upon ultimatum.

Fiona Tan | April 26, 2024, 07:49 PM



Reuters, citing several sources, reported that ByteDance would rather shut down TikTok in the United States (U.S.) than sell it.

Sell in nine months or be banned

This is in response to the sell-or-ban bill U.S. President Joe Biden signed into law on Apr. 24, 2024 U.S. time.

This gives ByteDance nine months to sell TikTok to a company that is not headquartered in a country that the U.S. considers a foreign adversary or, in its failure to do so, be banned across the U.S..

The deadline can be extended by 90 days if the authorities are satisfied that a possible sale is ongoing.

ByteDance, which owns TikTok is based in China. TikTok, on the other hand, has headquarters in Singapore and the U.S..

TikTok and its Singaporean chief executive officer Chew Shou Zi said they will take the matter to the courts, where they will fight the ban.

ByteDance says it has no plans to sell

But how that pans out remains to be seen.

In the meantime, ByteDance issued a statement on Toutiao on Apr. 25, that it has no plans to sell TikTok, Chinese state-owned media The Paper reported.

Toutiao is a Chinese news and information content platform owned by ByteDance.

ByteDance was refuting an article by The Information, an American technology industry–focused business publication, that reported that ByteDance is exploring scenarios for selling TikTok's U.S. business without the algorithm that recommends videos to TikTok users.

"Would rather exit than sell"

Four sources reportedly told Reuters that in the event that TikTok has exhausted all its legal options to fight the U.S. ban, ByteDance would rather exit the U.S. than sell and have its prized algorithm and valuable data fall into American hands.

Moreover, separating the algorithms from TikTok's U.S. assets would be an extremely complicated procedure and ByteDance is unlikely to consider that option, the sources said.

ByteDance also would not agree to sell the TikTok algorithm, one of its most valuable assets and its "secret source", to rivals, the four sources added.

TikTok U.S. apparently a small share of the pie

The sources also told Reuters that TikTok's exit from the U.S. would have a limited impact on ByteDance's business as TikTok accounts for a small share of ByteDance's total revenues and daily active users.

TikTok has over 170 million in the U.S., which, according to Statista, is the country with the largest TikTok audience by far as of January 2024.

One of the sources told Reuters that TikTok's daily active users in the U.S. make up just about five per cent of ByteDance's daily active users worldwide.

Another source said the U.S. accounted for about 25 per cent of TikTok's overall revenues in 2023.

In response to Reuters' request for comment, ByteDance reportedly declined while a TikTok spokesperson reportedly referred to ByteDance's statement on Toutiao.

ByteDance does not publicly disclose its financial performance or the financial details of any of its units, and this includes TikTok.

Separate sources told Reuters that the bulk of ByteDance's revenue comes from China, mainly from its other apps such as Douyin, the Chinese equivalent of TikTok.

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Top image from @TikTokPolicy/X, formerly Twitter and by @helloimnik from Unsplash