ByteDance, the parent company of TikTok, has said it would shut down the app and not sell it if those are its only options as the United States (US) threatens a ban. The South China Morning Post (SCMP), while citing sources close to the matter, said ByteDance is unwilling to sell the app to an American buyer, should legal challenges fail.
TikTok’s secret algorithm
A secret algorithm that underpins TikTok’s operations are integral to ByteDance’s overall business, making a sale highly unlikely.
The algorithm is responsible for the content shared on the “For You” page and has been the centre of political debate in the US. The page is designed to show videos that appeal to an individual user’s interests.
US critics allege that the algorithm has allowed third parties in China to spy on users, declaring it a national threat.
According to a report by The Information, ByteDance had floated the idea of selling TikTok in the US without the algorithm in question. ByteDance, however, has shot down these claims, calling the report “inaccurate”.
US signs TikTok ban bill
On Thursday, US President Joe Biden signed a bill into law that would ban TikTok if its parent company did not divest the app within 270 days. The US Senate passed the bill with a huge margin of 79 in favour and 18 against.
Lawmakers cited national security and surveillance risks associated with Chinese-owned apps.
The short-video sharing app now has nine months, or a year if Biden grants a 90-day extension, to comply with the Senate demand to sell or face ban.
No intention to sell TikTok
On Thursday evening, ByteDance released a statement on Toutiao, a media platform owned by the company, addressing the signing of the bill.
In its release, company CEO Shou Zi Chew expressed confidence in overcoming legal challenges to the proposed legislation.
The statement also added that the company had no plans to sell TikTok, despite the app only representing a small portion of ByteDance’s total revenues and daily active users in the US.
TikTok bans around the world
Many countries have banned TikTok either completely or at least partially due to privacy concerns. India banned the app and 58 other Chinese platforms in January 2020, making it the largest country to ban the app. Countries such as Australia, Belgium, Canada, Denmark, among others have introduced a partial ban, where the app cannot be downloaded to government owned devices or are not allowed in certain ministries.
How is the TikTok ban in the US different from other countries?
ByteDance has only taken the US to court over a potential ban. This has primarily to do with the sell-or-ban ultimatum imposed on the company, which ByteDance has termed “unconstitutional”. With the US Senate passing the bill into law, it may be an uphill battle for the video-sharing platform.
TikTok accounts for 25 per cent of ByteDance revenue
While ByteDance does not publicly disclose its financial performance, SCMP reports indicated that the majority of its revenue may come from China, primarily through apps like Douyin, TikTok’s Chinese counterpart.
TikTok reportedly accounted for approximately 25 per cent of ByteDance’s overall revenues last year, with its daily active users in the US, at more than 170 million, constituting only about five per cent of ByteDance’s global user base.
TikTok shares core algorithms with ByteDance’s domestic apps, providing a competitive advantage over rivals in China’s tech landscape. Despite the regulatory challenges, ByteDance remains committed to protecting its interests and maintaining control over its proprietary technology.
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