Sources indicate that ByteDance plans to shut down TikTok in the US instead of selling it, according to reports

If ByteDance exhausts all legal avenues to fight a bill banning TikTok from U.S. app stores, the Chinese company would prefer to shut down the app rather than sell it, according to four sources.

The core algorithms that TikTok relies on are crucial to ByteDance’s overall operations, making it highly unlikely that the app powered by these algorithms would be sold, sources close to the parent company said.

Despite TikTok’s popularity with over 1 billion users, it still operates at a loss and represents a small portion of ByteDance’s total revenue and daily active users. In a worst-case scenario, the parent company would choose to shut down TikTok in the US rather than sell it to an American buyer.

Shutting down TikTok would have minimal impact on ByteDance’s business, allowing the company to maintain its core algorithms, as per unidentified sources not authorized to speak to the media.

ByteDance confirmed in a statement on Toutiao that it has no plans to sell TikTok, responding to speculations suggesting otherwise. The company is not considering selling TikTok’s US business without its recommendation algorithm.

TikTok CEO Shou Zi Chew expressed optimism about blocking the bill signed by President Joe Biden, banning the app used by 170 million Americans. The company believes it will win the appeal against the ban.

The bill, passed by the US Senate, raises concerns about potential access to Americans’ data by China or surveillance through apps. The deadline for TikTok’s sale is set for January 19, but it could be extended if ByteDance shows progress.

ByteDance’s revenue increased from $80 billion in 2022 to nearly $120 billion in 2023, with TikTok’s US daily active users accounting for 5% of the company’s total DAUs worldwide, sources familiar with the matter revealed.

The core algorithm shared by TikTok and ByteDance’s domestic apps like Douyin is a valuable asset that ByteDance is not willing to sell to a competitor. Separating the algorithms from TikTok’s US assets would be complex, making it an unlikely option, sources added.

Former US Treasury Secretary Steven Mnuchin’s interest in forming an investor group to acquire TikTok may not attract buyers for ByteDance’s US assets, excluding the algorithm, sources noted.

Investors valued ByteDance at $268 billion when they offered to repurchase about $5 billion worth of stock in December.