Recently, Chinese tech giant ByteDance has adamantly stated that they have no intention of selling TikTok, despite a new US law that requires them to divest from the popular video platform. The US government imposed a nine-month deadline on ByteDance to sell TikTok due to national security concerns surrounding the app being used for espionage and propaganda by the Chinese government. ByteDance has been accused of being a potential security threat by owning TikTok. However, The Information reported that ByteDance was exploring scenarios for selling TikTok without its powerful algorithm, which recommends videos to over one billion users worldwide. Despite these reports, ByteDance has denied any plans to sell TikTok, refuting foreign media claims and reiterating their commitment to retaining ownership of the app.
TikTok has been embroiled in political and diplomatic controversies for years, particularly during the Trump administration’s attempts to ban the app. ByteDance has consistently denied any affiliation with the Chinese government and has taken steps to ensure the protection of US user data. The company even invested $1.5 billion in “Project Texas” to store US user data within the United States. Despite these efforts, critics argue that the real concern lies in the TikTok recommendation algorithm, which they believe should be separated from ByteDance to eliminate any potential security risks. TikTok CEO Shou Zi Chew has expressed plans to challenge the US government’s new law in court. However, legal experts suggest that national security considerations may overshadow free speech protections in this case.
TikTok is estimated to be worth tens of billions of dollars, making any forced sale a complex process. While US tech giants like Meta and Google may have the financial resources to acquire TikTok, competition concerns could hinder such a purchase. Additionally, the algorithm that drives TikTok’s success is considered a valuable asset, requiring approval from Beijing for any potential sale due to its classification as protected technology by the Chinese government. Beijing has expressed opposition to any forced sale of TikTok, emphasizing the need to safeguard Chinese companies in the global market. Despite TikTok’s global popularity, it only contributes a small portion of ByteDance’s overall revenue, according to industry analysts and investors. ByteDance has experienced rapid growth in recent years, establishing itself as one of the world’s most valuable companies with significant investments from international firms.
Investors like General Atlantic, SIG, SoftBank, and Lead Edge Capital have poured billions into ByteDance, contributing to the company’s immense success. From an investor standpoint, TikTok US represents a fraction of ByteDance’s business, albeit an exciting one. While the app has garnered massive popularity, its financial impact on ByteDance is relatively small compared to its other ventures. Lead Edge Capital’s Mitchell Green emphasized this point in a recent CNBC interview, highlighting the broader scope of ByteDance’s business beyond TikTok. As ByteDance continues to navigate the challenges posed by the US government’s regulatory measures, its investors remain optimistic about the company’s long-term growth prospects.