Beijing, Friday, April 26 – TikTok’s Chinese owner ByteDance last Thursday issued a statement suggesting that it would shut down the app in the United States rather than sell it to an American buyer, the Guardian reported in Friday, April 26. 1
This comes in the wake of US President Biden signing a bill into law on April 24th, 2024.
However, ByteDance has now threatened to pull out of the US in response.
“Foreign media reports that ByteDance is exploring the sale of TikTok are untrue. ByteDance has no plans to sell TikTok,” ByetDance said on its Toutio post. 2
The US law dedemands that if ByteDance failed to do so before January 19, 2025, the app would face a ban. However, ByteDance claims the shutdown statement stemmed from the company’s unwillingness to relinquish control over its core technologies, specifically the algorithms that power TikTok’s addictive user experience.
This also aligns with a February announcement by the Chinese government restricting Chinese companies from selling their stakes in critical technology firms without government approval. 3
Analysts also see this in the geopolitical light as it comes amidst heightened geopolitical tensions between the US and China, particularly in the telecommunications sector.
The US has long expressed concerns about the security of user data collected by TikTok, alleging potential access by the Chinese government.
These concerns also mirror past US actions against Chinese telecom giants Huawei and ZTE, which were effectively barred from doing business in the US.
Then the US-led West also banned companies like Intel from selling chips to China, expecting to stifle China’s manufacturing prowess in the electronic sector.
Analysts believe this standoff reflects the broader US-China decoupling, where both countries are attempting to lessen economic and technological reliance on each other.
TikTok reports that ByteDance’s founder, based in China, holds a 20% ownership stake, facilitated through a controlling interest in the company.
Approximately 60% of the company is owned by institutional investors, which include major US investment entities such as Carlyle Group, General Atlantic, and Susquehanna International Group.
The remaining 20% is under the ownership of global employees, while three out of ByteDance’s five board members are American.
Nevertheless, TikTok is not currently under the threat of an immediate ban in the US. The bill gives nine months for TikTok to decide.
TikTok has a massive global user base exceeding 1 billion, with US users constituting just 5% of that total.
Financially, TikTok’s contribution is minimal to ByteDance’s revenue, which soared to nearly $120 billion in 2023.
- TikTok: https://www.theguardian.com/technology/2024/apr/25/bytedance-shut-down-tiktok-than-sell[↩]
- TikTok: https://rb.gy/nd6vmo[↩]
- TikTok: https://www.bloomberg.com/news/articles/2024-02-21/china-tightens-grip-on-stocks-with-net-sale-ban-at-open-close[↩]
