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

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

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

Tik Tok accounts for a small share of Byte Dance's total revenues and daily active users, so the parent would rather have the app shut down in the US in a worst-case scenario than sell it to an American buyer, they said.

A shutdown would have limited impact on Byte Dance'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.

Byte Dance declined to comment. It said late on April 25 in a statement posted on Toutiao, a media platform it owns, that it had no plan to sell TikTok, in response to an article by The Information saying ByteDance is exploring scenarios for selling TikTok's US business without the algorithm that recommends videos to users.

TikTok's chief executive Chew Shou Zi said on April 24 the social media company expects to win a legal challenge to block legislation signed into law by President Joe Biden that he said would ban its popular short video app used by 170 million Americans.