ByteDance, the owner of TikTok, may consider shutting down its app instead of selling it if the company runs out of legal options to combat the legislation banning the platform from app stores in the US.

It is highly unlikely that TikTok's algorithms, which are crucial to ByteDance's overall operations, would be included in any potential sale of the app.

ByteDance Prefers to Shutdown TikTok Rather Than Selling It

Based on reliable sources, ByteDance's focus is not heavily reliant on TikTok accounts in terms of revenue and daily active users. 

In the event of a worst-case scenario, the parent company would prefer to shut down the app in the US rather than selling it to an American buyer, according to NY Post.

TikTok's CEO, Shou Zi Chew, expressed determination on Wednesday to fight back legally following President Joe Biden's signing of a law that requires ByteDance to sell the app within 270 days or risk being banned.

On Thursday, ByteDance dismissed a report that claimed it was considering options to sell TikTok's US business without the algorithm.

According to unnamed sources, a potential shutdown would not significantly affect ByteDance's business operations, and the company would not be required to relinquish its core algorithm. The sources, who were not authorized to speak to the media, shared this information.

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Looming TikTok Ban in US

As per TikTok, the Chinese founder of ByteDance holds a 20% stake in the company through a controlling position.

A significant portion, approximately 60%, is owned by institutional investors, which includes prominent US investment firms such as Carlyle Group, General Atlantic, and Susquehanna International Group.

Around the world, the remaining 20% of ownership belongs to employees, while three out of five board members of ByteDance are American.

According to BBC, the Chinese government has dismissed these concerns as baseless and has cautioned that a TikTok ban could have negative consequences for the US. Fortunately, TikTok is not currently under the threat of being banned in the US.

The new law grants ByteDance a nine-month window to divest the business, followed by an extra three-month extension, prior to any potential ban taking effect.

It is anticipated that the sale deadline would occur around 2025, following the inauguration of the 2024 presidential election victor.

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