ByteDance, the Chinese conglomerate that owns TikTok, has reportedly decided it would rather shut down its operations in the US than sell the platform to a US firm, as demanded by a new law signed by President Biden. This law, enacted on April 24, 2024, gives ByteDance a deadline of nine months, with a possible three-month extension, to divest TikTok or face a ban in the United States.
Sources familiar with the matter have disclosed to Reuters that ByteDance is adamant about not selling TikTok due to the requirement that would also involve handing over the sophisticated algorithms that drive TikTok and support ByteDance's other business ventures. These algorithms are a core aspect of ByteDance’s intellectual property, registered in China, making the separation not just complex but a significant business risk.
TikTok, although a major player in the social media landscape, represents only a fraction of ByteDance’s overall operations. Shutting down the platform in the US would supposedly have a limited impact on the parent company while allowing it to retain control over its valuable algorithms. In 2023, TikTok accounted for roughly $30 billion of ByteDance’s nearly $120 billion revenue, with US users contributing about a quarter of TikTok’s global revenues.
The situation is further complicated by reports that former US Treasury Secretary Steven Mnuchin is considering assembling an investor group to purchase the platform. Meanwhile, the US government maintains its stance that as ByteDance is a Chinese company, it could potentially be compelled to share data on American users, a claim that ByteDance has consistently denied and intends to challenge in court.
The potential closure of TikTok in the US would mark a significant moment in the ongoing tensions between the US and Chinese tech industries, highlighting the complexities of global tech governance in an era of heightened geopolitical rivalry.
