TikTok will prioritize terminating its service in the U.S. over selling its business if it loses the legal battle over the TikTok ban
A bill that had been drafted by the US Congress to order TikTok's Chinese parent company, ByteDance, to sell TikTok was
Exclusive: ByteDance prefers TikTok shutdown in US if legal options fail, sources say | Reuters
https://www.reuters.com/technology/bytedance-prefers-tiktok-shutdown-us-if-legal-options-fail-sources-say-2024-04-25/
Biden signs TikTok 'ban' bill into law, starting the clock for ByteDance to divest from it - The Verge
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The bill that was passed this time is called the ' Protecting Americans from Applications Controlled by Foreign Adversaries Act .' The bill passed the U.S. House of Representatives on April 20, 2024, and was passed by a majority vote in the Senate on April 23. President Biden signed the bill the following day, April 24.
President Biden signs TikTok ban bill, 270-day countdown begins until sale or withdrawal. What happened behind the unprecedented speed of the bill? - GIGAZINE
The bill would require TikTok's parent company, ByteDance, to sell TikTok and its applications within nine months, or it could be banned from using app stores and web hosting services in the United States.
'This legislation was crafted in secret, rushed through the House of Representatives, and ultimately bundled with more serious, must-pass legislation because it's exactly the kind of ban Americans hate,' TikTok spokesman Alex Haurek said in a statement. 'It's sad and ironic that Congress would pass a law that tramples on the free expression rights of 170 million Americans as part of a policy that claims to advance freedom around the world.' ByteDance has also told employees it plans to launch legal challenges to the bill if it becomes law.
TikTok has told employees it will fight in court against a bill by Congress to force the sale of its app - GIGAZINE
Experts have said that if TikTok were to sue to challenge the ban, it would be difficult for government authorities to win a lawsuit by arguing that TikTok is a propaganda tool for the Chinese Communist Party and that there are privacy concerns, as this would violate the First Amendment to the U.S. Constitution, which guarantees freedom of speech.
On the other hand, a ByteDance official speculated that 'if they lose the legal battle, they will choose to close the app rather than sell TikTok.' The reason for this is that the algorithm used by TikTok is the core of ByteDance's entire operations, and they are concerned that selling it could lead to the algorithm being transferred to a rival company. It has also been pointed out that TikTok's intellectual property license is registered with ByteDance in China, making it difficult to separate the algorithm from the parent company and sell it.
Therefore, ByteDance does not want to sell TikTok, which contains algorithms that are important to it, to another company and has chosen to suspend its service in the United States.
Meanwhile, another source has reported that discussions are underway within ByteDance to sell off TikTok's US business, excluding its proprietary algorithm. ByteDance is reportedly in talks to sell a majority stake in TikTok's US business to another company, and the sale would exclude TikTok's proprietary video recommendation algorithm.
However, the sticking point in the sale is not only whether TikTok has its own algorithm, but also the price. ByteDance executives have previously reported that TikTok's global business is worth more than $100 billion (about 15 trillion yen), which is about half the value of the entire Chinese company, and according to sources, ByteDance has proposed a price of 'starting from $20 billion (about 3.1 trillion yen)' when selling its US business. The Wall Street Journal, an overseas media outlet, has raised the possibility that the final sale price will exceed $100 billion, pointing out that 'such a high-priced business sale has never been seen in the technology industry before.'
TikTok's US operations are run from offices in the US, but since 2022, there has been increasing pressure from ByteDance's China headquarters, and there has been a trend to value Chinese employees over American employees. A TikTok official reported that 'we have been instructed to prioritize hiring Chinese or Mandarin-speaking staff over Americans,' and that some American workers have been manipulated to promote deliberate restructuring by manipulating employee evaluations, long working hours, and an opaque performance evaluation system. A person familiar with ByteDance executives' thinking on these developments said, 'Executives believe that American employees are less productive than Chinese employees.' In addition to these, numerous instances of sex discrimination and discrimination against sexual minorities have been discovered within the company, and the company has been hit by many discrimination-related lawsuits and complaints.
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