ByteDance prefers TikTok shutdown in US if legal options fail, sources say

TikTok owner ByteDance would prefer to shut down its loss-making app rather than sell it if the Chinese company exhausts all legal options to fight legislation to ban the platform from app stores in the U.S., four sources said.

However, TikTok is not facing an immediate ban in the US.

The new law gives ByteDance nine months to sell the business, and an additional three-month grace period, before a potential ban can be enforced.

ByteDance is resisting the call to sell TikTok. ByteDance has until Jan. 19, 2025, to sell the app following Biden signing the bill to ban the app.

Speaking on TikTok, the company’s CEO, Shou Zi Chew, blasted the bill as “unconstitutional,” telling viewers, “This is a ban on TikTok and a ban on you and your voice.”

The algorithms TikTok relies on for its operations are deemed core to ByteDance's overall operations, which would make a sale of the app with algorithms highly unlikely, said the sources close to the parent.

TikTok accounts for a small share of ByteDance's total revenues and daily active users, so the parent would rather have the app shut down in the U.S. in a worst case scenario than sell it to a potential American buyer, they said.

A shutdown would have limited impact on ByteDance's business while the company would not have to give up its core algorithm, said the sources, who declined to be named as they were not authorised to speak to the media.

ByteDance's 2023 revenues rose to nearly $120 billion in 2023 from $80 billion in 2022, said two of the four sources. TikTok's daily active users in the U.S. also make up just about 5% of ByteDance's DAUs worldwide, said one of the sources.