HONG KONG: ByteDance, the owner of TikTok, would rather close down the app than sell it if it exhausts all legal avenues to combat legislation aiming to ban the platform from U.S. app stores, said four different sources. These sources close to ByteDance note that the algorithms pivotal to TikTok’s functionality are considered fundamental to ByteDance’s broader operations, making a sale of the app with its algorithms highly improbable.
Despite TikTok constituting a minor portion of ByteDance’s total revenues and daily active users, the parent company would opt to shut down the app in the U.S. in a worst-case scenario rather than selling it to an American buyer. The sources suggest that a shutdown would minimally impact ByteDance’s business, allowing it to retain control over its core algorithm.
Responding to an article by The Information suggesting ByteDance was exploring options to sell TikTok’s U.S. business without its recommendation algorithm, ByteDance stated late Thursday on its media platform Toutiao that it has no intention of selling TikTok. When Reuters sought comment, a TikTok spokesperson referred to ByteDance’s Toutiao statement.
TikTok’s CEO, Shou Zi Chew, expressed confidence on Wednesday in the company’s ability to overcome legal challenges against legislation signed by President Joe Biden, which aims to ban the app due to concerns about data security and potential Chinese surveillance. Biden’s signing sets a deadline of January 19 for a sale, with a potential three-month extension if ByteDance demonstrates progress.
ByteDance does not publicly disclose its financial performance, but it is reported to generate the majority of its revenue from China, primarily through apps like Douyin. The U.S. market accounted for approximately 25% of TikTok’s revenues last year, according to a source with direct knowledge.
Investment bankers find it challenging to assess TikTok’s value compared to competitors like Meta Platforms’ Facebook and Snap, given the limited availability of TikTok’s financial data. According to two of the sources, ByteDance’s revenues surged to nearly $120 billion in 2023 from $80 billion in 2022. Additionally, one source notes that TikTok’s daily active users in the U.S. constitute roughly 5% of ByteDance’s worldwide DAUs.
