TikTok owner ByteDance would rather shut down the app in the US than sell it to a potential US buyer if the Chinese company exhausts all legal options. Four sources told Reuters about this on condition of anonymity, as they do not have permission to communicate with the press.
According to them, the algorithms on which TikTok runs are considered the basis of ByteDance's overall business, making the sale of the app together with the algorithms unlikely.
Algorithms are not for sale
TikTok uses similar algorithms to ByteDance's other apps in China. For example, Douyin. They are considered even better than competitors' algorithms. It is almost impossible to sell TikTok together with its algorithms. These algorithms are protected by an intellectual property license registered to ByteDance in China. That is, it is very difficult to separate them from the parent company. Even if it were possible, the very process of separating the algorithms from the American part of TikTok is an extremely difficult procedure. According to the sources, ByteDance is unlikely to agree to such a thing. In addition, ByteDance will not agree to sell one of its most valuable assets — these algorithms — to competitors.. So, most likely, they will choose to shut down TikTok in the US rather than get rid of their «secret source».
In 2020, China passed an export control law that restricts the export of so-called controlled goods. That is, the export of algorithms, source code, and similar data or technologies is subject to a permit procedure.
TikTok's CEO said the company plans to challenge a law signed by President Biden that requires TikTok to be sold by January 19 (the day before his presidential term ends) or the app will be banned. But he can extend that deadline by three months if he believes ByteDance is making progress in overcoming the problem.
US senators overwhelmingly approved the legislation amid concerns that China could access or spy on US users' data through the app.
ByteDance, which owns TikTok, does not publicly disclose its financial information. It gets most of its revenue in China from other applications. The US brought in about 25% of TikTok's revenue last year.
Due to the fact that TikTok's financial information is closed, it is difficult for experts to estimate its value.
In 2020, the Trump administration already tried to ban TikTok and WeChat (another ByteDance app) in the US, but the courts blocked it. Since then, the app has faced partial bans and attempts to ban it entirely in the US and other countries.