Partnerships / Acquisitions

ByteDance To US: TikTok's Code Isn't For Sale

China-based ByteDance has said in boardroom discussions that it won't be selling its essential algorithm for the video-sharing app TikTok in any manner, according to sources quoted by the South China Morning Post.

The company has faced scrutiny in recent weeks from the U.S. government over its potential for data mining and spying on users, with the President Donald Trump administration mandating it must divest its U.S. interests to another company.

One of the main concerns has been the programming code at the heart of the app which decides what content gets shown to who.

Companies such as Microsoft and Oracle, among others, have been prospective buyers, with an anticipation for some decision to be made on the algorithm.

Now, ByteDance has reportedly said it won't be selling the key part of the app, with the source saying ByteDance "will not hand out source code to any U.S. buyer, but the technology team of TikTok in the U.S. can develop a new algorithm," with the reasoning that "the car can be sold, but not the engine," according to the report. By leaving the algorithm out, U.S. sellers could be treading water.

TikTok is in conversation with the government to clear the matter up, although nothing has been finalized.

But if Trump doesn't go for the terms, TikTok — widely popular with young Americans, especially as the pandemic shut down most social activities — could go dark after the Sept. 20 deadline for selling it. Trump, as of Sept. 10, didn't show any signs of revoking his deadline.

TikTok may, in the end, simply stay with ByteDance, and no sale could happen at all. China issued a new regulatory rule requiring ByteDance to report any technical and financial issues involved in the sale, with the review purported to be "substantial and take time."

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