According to a new report from Bloomberg, ByteDance, the owner of TikTok, would rather close down its unprofitable app than sell it if the Chinese business runs out of legal avenues to challenge the law that seeks to prohibit the platform from being available on app stores in the United States.
According to sources close to the parent company, the algorithms used by TikTok are considered essential to ByteDance’s overall operations.
This means that it is exceedingly unlikely for the app to be sold together with its algorithms.
According to sources, TikTok contributes only a small portion of ByteDance’s overall profits and daily active users.
In the event of a worst-case scenario, the parent company would prefer to shut down the app in the United States rather than selling it to a possible American buyer.
According to anonymous sources, a shutdown would have minimal consequences for ByteDance’s operations, as the company would not be required to relinquish its fundamental algorithm.
In a statement published on Toutiao, a media platform owned by ByteDance, it was stated on Thursday that there are no intentions to sell TikTok.
This statement was made in response to an article by The Information, which claimed that ByteDance is considering options to sell TikTok’s U.S. business without including the algorithm responsible for recommending videos to TikTok users.
TikTok’s CEO, Shou Zi Chew, expressed confidence on Wednesday that the social media firm will successfully overcome a court fight against legislation signed into law by President Joe Biden.
This legislation aims to prohibit the usage of TikTok, a widely popular short video app utilized by 170 million Americans.
The bill, which received strong support from the U.S. Senate on Tuesday, is motivated by the broad concerns among U.S. senators regarding China’s potential access to Americans’ data or the app’s potential for surveillance purposes.
ByteDance, supported by investors such as Sequoia Capital, Susquehanna International Group, KKR & Co, and General Atlantic, had a valuation of $268 billion in December.
During that time, it made an offer to repurchase approximately $5 billion worth of shares from its investors.
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