TikTok owner ByteDance is reportedly not willing to sell or transfer the algorithm or underlying code of its popular short video streaming platform in any sale or acquisition deals. A source familiar with the company's internal discussions revealed that the Chinese firm was unwilling to part with the "engine" of one of its most profitable mobile apps.
The same source, which declined to be identified, stated that ByteDance will allow the U.S. team operating TikTok to develop a new algorithm if it is sold to a U.S. company. The company has reportedly already informed U.S. regulators and all of its potential bidders of its decision.
ByteDance reportedly came to the decision following the Chinese government's imposition of its newly updated technology export controls. The policy change, which took effect two weeks ago, requires companies to seek government permission before it sells or transfers intellectual rights or technologies overseas. ByteDance had stated that it fully intends to comply with the government's new mandate.
Under the revised policy, Chinese companies that intend to sell or transfer sensitive technologies will need to seek approval from provincial-level commerce authorities. The review process would take up to 30 working days before approval and a technology export license is granted.
It is still not yet clear if ByteDance's "no algorithm" decision will bode well with the Trump administration and its looming deadline for the company to transfer control of its operations to a U.S. company. U.S. President Donald Trump previously stated that it would not be giving ByteDance any extensions and that if it fails to find a U.S. buyer it would be banned from operating in the country. ByteDance only has until Tuesday this week to finalize a divestment deal.
Experts have stated that TikTok's U.S. team could technically "copy" the algorithm or come up with something similar for the U.S. market. Users in the country will likely need some time to get used to the new algorithm, potentially allowing local competitors to swoop in and steal some of the company's users.
Following the issuance of the ultimatum for it to find a U.S. buyer, TikTok had filed a lawsuit against the U.S. government. China has also openly slammed the U.S. for enforcing such an order. ByteDance has repeatedly denied the U.S.'s accusations that its platform was a national security threat. TikTok also previously clarified that none of its servers were located in China and were not under its government's jurisdiction.