ByteDance, the parent company of TikTok, has stated that it would shut down the app rather than sell it if those are its only options as the United States (US) threatens a ban.
According to sources close to the matter, ByteDance is unwilling to sell the app to an American buyer should legal challenges fail.
The algorithms that TikTok relies on for its operations are considered core to ByteDance’s overall operations, making a sale of the app with algorithms highly unlikely. ByteDance prefers to shut down the app in the US rather than sell it to a potential American buyer. This decision would have a limited impact on ByteDance’s business while allowing the company to retain its core algorithm2.
TikTok’s CEO, Shou Zi Chew, has expressed confidence in winning a legal challenge to block legislation signed into law by President Joe Biden, which aims to ban the popular short video app used by 170 million Americans.
The bill is driven by concerns among US lawmakers about China potentially accessing Americans’ data or using the app for surveillance. The law sets a deadline for a sale, but it could be extended if ByteDance shows progress.
ByteDance’s 2023 revenues rose significantly, reaching nearly US$120 billion, with TikTok’s daily active users in the US accounting for about 5% of ByteDance’s DAUs worldwide.
The concern about China accessing Americans’ data through TikTok stems from several factors:
Data Privacy and Security:
- TikTok collects vast amounts of user data, including personal information, browsing history, and location data.
- Given that ByteDance, TikTok’s parent company, is based in China, there are concerns that the Chinese government could potentially access this data.
- The fear is that sensitive information about American citizens could be misused or exploited.
National Security Implications:
- TikTok’s popularity among US users means that a significant portion of American citizens’ data is stored on servers controlled by a Chinese company.
- In the context of geopolitical tensions between the US and China, this raises concerns about national security.
- Lawmakers worry that China could use TikTok as a tool for espionage or influence operations.
Lack of Transparency:
- ByteDance’s opaque data practices and lack of transparency have fueled suspicions.
- The company has faced scrutiny over how it handles user data and whether it shares it with the Chinese government.
Legislation and Regulation:
- The US government has taken steps to address these concerns. For instance, former President Joe Biden signed legislation aimed at banning TikTok.
- The law sets a deadline for a sale of TikTok to an American buyer, but ByteDance’s preference is to shut down the app rather than sell it.
In summary, the worry revolves around data privacy, national security, and a foreign government’s potential misuse of user data. The situation remains complex, with legal battles and geopolitical considerations at play.
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