Source of Reuters said that the algorithms that TikTok is using are also the “soul” of ByteDance. Therefore, it is almost certain that Chinese companies will not sell applications with accompanying algorithms. In addition, TikTok only contributes a small portion of the mainland technology giant’s total revenue. Therefore, in the worst scenario, closing this application will not have a significant impact on ByteDance’s business operations.
Late on April 25, in a statement posted on the social network Toutiao, parent company TikTok affirmed that it has no plans to sell this application, responding to the information. The Information said that ByteDance is considering selling TikTok in the US without the video recommendation algorithm.
The law that President Biden just signed requires ByteDance to divest TikTok or stop operations in the US, with a deadline of January 19, 2025 – just one day before the end of the presidential term. However, Mr. Biden can extend this deadline for another 3 months if he determines that the Chinese technology giant is “making changes.”
ByteDance does not publicly disclose the business details of its subsidiaries. This business has its main source of revenue in China, mainly from other applications such as Douyin – TikTok domestic version for the mainland.
Meanwhile, Reuters said that the US market accounted for about 25% of TikTok’s total revenue last year. In 2023, ByteDance revenue will reach $120 billion, up from $80 billion a year earlier. TikTok’s daily users (DAU) in the US only account for about 5% of ByteDance’s total DAU.
Three sources said TikTok shares similar core algorithms on ByteDance’s domestic apps such as short video platform Douyin. One of them said the company’s algorithm is considered better than rivals such as Tencent and Xiaohongshu.
Separating TikTok from the algorithms is unlikely, as the intellectual property license is registered under ByteDance in China. Therefore, finding a solution to separate the algorithm from the application in the US market becomes an extremely complicated process.
In addition, Beijing also affirmed that it will refuse to allow ByteDance to divest its capital. “China will resolutely oppose (the forced sale of TikTok),” a spokesperson for the country’s Ministry of Commerce said at the end of March 2023. “The sale or divestment of TikTok involves technology exports and must undergo administrative licensing procedures in accordance with Chinese laws and regulations.”
In 2020, China enacted the Export Control Law, which stipulates that “controlled items,” including algorithms, source code and data, are subject to an approval process.
Besides the algorithm, TikTok’s main assets are identified as user data, as well as business operations and product management.
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