In the wake of a potential setback that could lead to a ban on TikTok in the United States, ByteDance – the company that owns the popular app – finds itself in an uneasy position and is exploring various alternatives.
However, according to reports from The Guardian newspaper, if ByteDance exhausts all legal options in U.S. courts, the Chinese company would prefer to shut down its operations in the country rather than sell the app’s U.S. business.
TikTok algorithms are essential
According to four anonymous sources cited by the publication, ByteDance considers the algorithms TikTok uses for its operations essential for the entire company’s work. As a result, selling the software to a U.S. company is considered “highly unlikely.”
For this reason, the Chinese technology giant would prefer to completely shut down the popular short video social network rather than hand it over to a foreign company.
With President Joe Biden signing a law that could potentially ban TikTok from operating in the United States, ByteDance’s primary recourse is to challenge the decision in court. However, the company only has a 9-month window to sell its U.S. assets or achieve a historic turnaround, allowing TikTok to continue operating in the country.
TikTok itself operates at a loss.
While TikTok has amassed billions of users globally, ByteDance’s social network still operates at a loss. However, the platform represents only a tiny portion of the Chinese company’s total revenue and daily active users. ByteDance’s main product is the Toutiao news network.
According to sources cited by The Guardian, if TikTok were forced to shut down operations in the United States, the impact on ByteDance’s overall financial accounts would be limited. The company views this scenario as preferable to giving up its proprietary algorithms to another company.
The anonymous sources indicate that ByteDance considers the algorithms powering TikTok’s operations essential for the entire company’s work. As such, selling this core software to a U.S. entity is considered “highly unlikely.”
While losing access to the U.S. market would be a setback, ByteDance appears willing to take that risk rather than compromise its valuable algorithms. For the Chinese tech giant, preserving control over its proprietary technology seems to be the priority, even if it means exiting one of the world’s largest markets.
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