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ByteDance, TikTok's parent company, is contemplating shutting down the app in the US instead of selling it, Reuters reported citing four sources.
This is coming as ByteDance faces legal challenges following legislation seeking to ban the platform from US app stores.
According to the sources familiar with the matter, it is unlikely for TikTok to be sold along with its crucial algorithms, as these algorithms are considered essential to ByteDance's overall operations.
US President Joe Biden recently signed into law a bill seeking to ban the social media app in the country.
The measure, previously approved by the US Congress, mandated that ByteDance, which is based in China, sell the app within nine months or risk being banned from the US.
The law was introduced due to concerns that TikTok might share user data with the Chinese government - a claim the company has consistently denied.
Although TikTok only contributes a small percentage of ByteDance's overall income and daily active users, the parent company reportedly would prefer to see the app blocked in the US in the worst-case scenario rather than sell it to an American buyer.
The sources, who asked not to be named because they were not permitted to speak to the media, stated that ByteDance's basic algorithm would still be available even if the company were to shut down and that the closure would have minimal influence on the company's revenue.
Reuters reports that ByteDance declined to comment.
In a statement posted on Toutiao, a media platform owned by the company, Bytedance clarified on Thursday that there are no plans to sell TikTok.
This response comes in light of an article by The Information, an American technology and industry-focused publication, which suggested that ByteDance is considering options for selling TikTok's U.S. business, but without the algorithm that recommends videos to users.
When asked for comment by Reuters, a representative from TikTok pointed to the statement posted on Toutiao by ByteDance.
TikTok's CEO Shou Zi Chew expressed confidence on Wednesday that the social media company will successfully overcome a legal challenge against legislation signed into law by Biden.
TikTok currently boasts 170 million American users.
According to a separate source with direct knowledge, the US contributed approximately 25% of TikTok's total revenues last year.
What is TikTok's secret algorithm?
The algorithm that powers TikTok's operations is a crucial component of ByteDance's overall business, making a sale highly improbable, Reuters reports.
According to the four sources, ByteDance is reportedly unwilling to part with one of its most valuable assets-the TikTok algorithm, often referred to as its "secret source"-in any potential sale to competitors.
The algorithm plays a crucial role in determining the content displayed on the "For You" page and has become a focal point of political discussions in the United States.
The page is specifically tailored to display videos that cater to the unique interests of each user.
Critics in the United States have called the algorithm a national security threat because they believe it has enabled third parties in China to spy on users.
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