WASHINGTON (Agencies) : Chinese tech giant ByteDance has said it has no intentions of selling TikTok despite pressure from the new U.S. law that requires it to either divest from the immensely popular video platform or face censorship in the United States.
The Beijing-based firm’s first official response to the law on Thursday came on Toutiao, a Chinese news app it owns, and was responding to media reports that said it was exploring scenarios for selling TikTok’s U.S. business.
U.S. lawmakers set the nine-month deadline on “national security grounds,” alleging that the Chinese government can use TikTok for espionage and propaganda as long as ByteDance owns it.
The Information, a tech-focused U.S. news site, reported that ByteDance was considering scenarios for selling TikTok without the powerful secret algorithm that recommends videos to its more than 1 billion users worldwide.
ByteDance denied it was considering a sale.
“Foreign media reports about ByteDance exploring the sale of TikTok are untrue,” the company posted on Toutiao.
“ByteDance does not have any plans to sell TikTok.”
Diplomatic hot potato
Beijing has signaled that TikTok should fight what it has called a “robbers” act by U.S. lawmakers: “to snatch from others all the good things that they have.” Should a legal challenge fail, observers say Chinese authorities are unlikely to allow a sale.
The company has said the law is an infringement on the free speech rights of its users, most of whom use the app for entertainment.
“We believe the facts and the law are clearly on our side, and we will ultimately prevail,” the company wrote on the social platform X.
TikTok has been a political and diplomatic hot potato for years. It first found itself in the crosshairs of former President Donald Trump’s administration, which tried unsuccessfully to ban it.
It has forcefully denied any link to the Chinese government and said it has not and will not share U.S. user data with Beijing.
TikTok says it has also spent around $1.5 billion on “Project Texas,” under which U.S. user data would be stored in the U.S.
Its critics say the data is only part of the matter, and that TikTok’s hugely successful recommendation algorithm – the “secret sauce” for its success – say it needs to be taken from ByteDance.
TikTok CEO Shou Zi Chew has said the company will take the fight against the new law to the courts, but some experts believe that for the U.S. Supreme Court, national security considerations could outweigh free speech protection.
The legislation that U.S. President Joe Biden signed this week could allow Washington to widen its scope to target other China-related apps, such as the popular e-commerce platform Temu and encourage U.S. allies to follow suit, said Hu Xijin, a former editor-in-chief for the party-run newspaper Global Times.
With 170 million American users, TikTok should “have more guts to fight to the very end and refuse to surrender,” Hu, now a political commentator, said Wednesday on Chinese social media.
Bullish investors
The estimated valuations of TikTok are in the tens of billions of dollars, and any forced sale would present major complications.
Among those with deep enough pockets, U.S. tech giants such as Instagram-parent Meta or Google would likely be blocked from buying the app over competition concerns.
Further, many investors consider TikTok’s recommendation algorithm to be its most valuable feature.
But any sale of such technology by a Chinese company would require approval from Beijing, which designated such algorithms as “protected technology” following Trump’s attempt to ban TikTok in 2020.
Beijing has so far vocally opposed any forced sale of TikTok, saying it will take all necessary measures to protect Chinese companies.
While TikTok is a global phenomenon, it represents a small fraction of ByteDance’s revenue, according to analysts and investors.
ByteDance has enjoyed explosive growth in recent years, becoming one of the most valuable companies in the world. Its international investors, including U.S. firms General Atlantic and SIG, and Japan’s SoftBank, have stakes worth billions.
“TikTok U.S. is a tiny part of the overall business. It is an exciting part of the story, but … relative to the overall size, it’s a tiny part,” ByteDance investor Mitchell Green of U.S.-based Lead Edge Capital told CNBC television last month.
