TikTok faces uncertain future in the US amid ban threat

As the threat of a ban on TikTok looms in the United States, parent company ByteDance is facing a tough choice – to sell the popular app or shut it down completely. Sources close to the company have revealed that ByteDance would prefer to shut down TikTok in the US rather than sell it if all legal options to fight the ban fail.

The algorithms that power TikTok are considered crucial to ByteDance’s overall operations, making a sale of the app with the algorithms highly unlikely. While TikTok accounts for only a small share of ByteDance’s total revenues and daily active users, the parent company is reluctant to part with the app, even in the face of a potential ban in the US.

A potential shutdown of TikTok in the US would have a limited impact on ByteDance’s business, allowing the company to retain its core algorithm. ByteDance has remained tight-lipped about the situation, declining to comment on the matter.

The ban on TikTok is part of broader concerns among US lawmakers about data security and Chinese surveillance. The legislation signed into law by President Joe Biden sets a deadline of January 19 for the sale of TikTok’s US business, but the company is hopeful of winning a legal challenge to block the ban.

ByteDance’s financial performance in the US has been a topic of speculation, with the company generating about 25% of TikTok’s overall revenues from the US market. However, valuing TikTok compared to competitors like Meta Platforms (Facebook) and Snap is challenging due to the limited financial data available.

The algorithms that power TikTok are among its most valuable assets and are shared with ByteDance’s domestic apps like Douyin. Separating these algorithms from TikTok’s US assets would be a complex process, making it unlikely that ByteDance would consider that option.

The threat of a forced divestment of TikTok has faced resistance from China, which indicated that it would oppose any such move. The country has strict regulations around the export of technologies like algorithms, further complicating any potential sale of TikTok.

As ByteDance weighs its options, the future of TikTok in the US remains uncertain. Whether the app will be forced to shut down or sold to an American buyer without its core algorithms remains to be seen. Former US Treasury Secretary Steven Mnuchin has expressed interest in forming an investor group to buy TikTok, as reported previously by Qonversations:  https://qonversations.com/the-battle-for-tiktok-former-us-treasury-secretary-mnuchin-plans-investor-group-acquisition-amid-national-security-concerns/